A new form of "tax protectionism" is infecting Washington -- several serious proposals are being floated in the nation's capital that would penalize Americans for investing in low-tax rather than high-tax jurisdictions.
Proponents say the measures are needed to catch tax cheats -- but ignore the fact that most of the low-tax jurisdictions such as the Cayman Islands, Switzerland, etc., already have tax information exchange agreements with the United States.
Nevertheless, Sens. Carl Levin (D-Mich.), Bryon Dorgan (D-N.D.), and Max Baucus (D-Mont.), as well as officials of the Obama Treasury, want to make it more onerous and costly for American companies to do business around the world and for Americans to invest elsewhere. They would even make it more difficult for non-Americans to invest in the United States.
The so-called tax havens are for the most part no more than way-stations to temporarily collect savings from around the world until they are invested in productive projects, such as building a new shopping center or semi-conductor plant in the United States. This enables a better allocation of world capital, leading to higher, not lower, global growth rates.
Indeed, to the extent tax competition between jurisdictions holds down the increase in the growth of governments, citizens of all countries experience more job opportunities and higher standards of living.
And to the extent that businesses and individuals are discouraged by regulations from investing outside their own jurisdictions, they may simply choose to work and save less, period.
[Again, the 'cheating' argument only applies if you first subscribe to the notion that it's the government's money to begin with.
Its not, it's individuals, and our government competes with all other jurisdictions to be a part of its use.
As always, the socialistic reaction to competition is to kill it with legislation - are you listening, socialized-medicine proponents?]
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