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Townhall
Finance
Corporate Tax Avoidance: Where’s
the Harm?
Chris
Edwards
May
27, 2013
Politicians
are having fun slapping around big corporations for
supposedly not paying enough taxes. In this country, Apple is the
current target,
while in Europe it’s Google, Amazon, and Starbucks, according to the
Washington
Post today.
But
there is an elephant in the room that the many reporters and
politicians blustering over the issue have been too ideologically blind
to see:
There is no obvious harm being done by today’s corporate tax avoidance.
The
first thing to note is that when investment flows through tax
havens, it’s not clear that it causes any economic distortions. The
Washington
Post story makes a big thing out of foreign direct investment (FDI)
flowing
through low-tax Bermuda and the Netherlands, but then ending up funding
actual
factories built elsewhere. Economists worry when taxes distort real
investment
flows, but that does not seem to be happening here. Indeed, FDI is
likely being
allocated efficiently across final destination countries in these
situations,
and the interim trip through low-tax jurisdictions simply shaves off an
extra
layer of unproductive and distortionary taxes...
Read
the rest of the article at Townhall Finance
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