Friday, August 19, 2011

Jeffrey Sachs on inequality, tax and where globalisation went so horribly wrong


Jeffrey Sachs is back in the Financial Times with a fine article about the failed economic leadership of western governments, and tax havens feature prominently in his analysis.

"Tax havens", he notes, "have proliferated even as the politicians have occasionally railed against them" we like the twist to the politician's collective tails implied by the word 'occasionally'. And he continues: "In the end the poor are doubly hit, first by global market forces, then by the ability of the rich to park money at low taxes in hideaways around the world."

We have argued for many, many years, that tax havens are a major faultline in the globalisation project, and Sachs clearly shares our viewpoint. Not only has wealth cascaded upwards into the hands of a tiny, tiny minority - killing 'trickle down' theory stone dead - but tax competition has forced governments to concede to the power of big business:

The simple fact is that globalisation has not only hit the unskilled hard but has also proved a bonanza for the global super-rich. They have been able to invest in new and highly profitable projects in emerging economies. Meanwhile, as Warren Buffett argued this week, they have been able to convince their home governments to cut tax rates on profits and high incomes in the name of global tax competition.

Sachs makes a strong case for Europe and America to radically overhaul their fiscal policies, including tax hikes for rich people and on untaxed corporate profits shielded by loopholes and offshore structures in tax havens.

Read the full article here.


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