from an expert in the field:
Chye-Ching Huang is a senior tax policy analyst at the Center on Budget and
Policy Priorities ( www.cbpp.org).
THE USE OF tax havens by
individuals and corporations hurts the American
It undermines competition, because it gives international companies with
access to sophisticated tax advice an advantage
over smaller and domestic companies that can’t
stash their profits offshore in low-tax countries—
tax havens—to avoid tax.
It drains the United States of tax revenues that
could be used to reduce deficits or invested in
critical needs, including education, healthcare and
infrastructure. Many local businesses and ordinary Americans are already feeling the effects of
the sequester cuts to domestic spending, in areas
ranging from children losing Head Start to seniors
losing Meals on Wheels. Yet multinational corporations and wealthy individuals are allowed to use
tax havens to avoid paying taxes that could help
forestall these harmful cuts.
And, it’s unfair to individuals and businesses
that pay their fair share of U.S. taxes.
Although tax havens are offshore, U.S. policymakers could and should act to stop U.S. citizens
and corporations from using them to avoid taxes.
Policymakers could provide the Internal
Revenue Service (IRS) with the funding it needs to
ensure that people pay the taxes they owe, includ-
ing sufficient funds to detect filers who are using
offshore accounts to avoid paying their taxes.
Are u.S. manufacturing
jobs still important to
Percentage reflects votes
received by June 11, 2013.
Is golf a sport?
YES: 59% NO: 41%
votes received by
May 31, 2013.
from an expert in the field:
Daniel J. Mitchell is a senior fellow at the Cato Institute ( www.cato.org).
POLITICIANS HAVE AN
unfortunate tendency to
overspend and overtax.
When they do this for a
short period, growth in the
productive sector of the
economy tends to diminish.
And if they overtax and
overspend for a long period, you suffer the kind of
fiscal crisis we now see in so many European
That’s not what any of us want, but how can
we restrain politicians? There’s no single answer,
but “tax competition” through tax havens is one of
the most effective ways of controlling the greed of
the political elite.
We know that taxes are onerous in California
and Massachusetts, but imagine how much worse
they would be if the politicians in those states
didn’t have to worry about investors, entrepreneurs and small-business owners escaping to
zero-income-tax states such as Nevada and New
The same principle applies on a global basis.
Nations with pro-growth tax systems, such as
Switzerland and Singapore, attract jobs and invest-
ment from uncompetitive countries such as France
and Germany. These tax havens force the politi-
cians in Paris and Berlin to restrain their greed.
Opinions expressed are those of
the individuals or organizations
represented and are presented
to foster discussion. Costco and
The Costco Connection take no
position on any Debate topic.