The Great Tax Haven Debate, Part II

Dan Mitchell's defense of tax havens is another in a long line of articles and discussions from the Cato Institute which do a great social service to individual liberty. I'll quote a portion of his response here, but refer back to his response and the original article after the jump. In a time of statist reductionist attempts to socialize our society, it's good to see people like Mitchell who get it and are vocal about it;

Back in April, responding to an article written by Ann Hollingshead for the Task Force on Financial Integrity and Economic Development, I wrote a long post defending so-called tax havens.

I went through the trouble of a point-by-point response because her article was quite reasonable and focused on some key moral and philosophical issues (rather than the demagoguery I normally have to deal with when people on the left reflexively condemn low-tax jurisdictions).

She responded to my response, and she raised additional points that deserve to be answered.

So here we go again. Let's go through Ann's article and see where we agree and disagree.

A couple of weeks ago, I wrote a blog post criticizing the philosophies of Dan Mitchell, a libertarian scholar from the Cato Institute. I asked for a "thoughtful discussion" and I got it—both from the comments section of our blog and from Dan himself.  On his own blog, Dan replied with a thought-provoking point-by-point critique of my piece.

It has been a polite discussion, which is good because readers get to see that we don't really disagree on facts. Our differences are a matter of philosophy, as Ann also acknowledges.

The differences are more than philosophical. Mitchell recognizes that interventionist policies by the state are what lead to economic instability, along with promoting the corruption and gross theft of wealth in the process. Keynesian economics have long since been proven failure, and are the Left's parallel to Heston clinging to guns. 

Dan made several interesting points in his rebuttal. As much as I'd like to take on the whole post right now, my reply would be far too long and I don't think our readers would appreciate a blog post that approaches a novella. Rather I'll focus on a couple of his comments that I find interesting on a philosophical level (there were many) and which demand a continued conversation because, I believe, they are the basis of our differences. We'll start with a rather offhand remark in which Dan indirectly refers to financial privacy as a human right. This is an argument we've heard before. And it is worth some exploration.Unless I am very much mistaken, Dan's belief that financial privacy is a human right arises out of his fundamental value of freedom. My disagreement with Dan, therefore, does not arise from a difference in the desire to promote human rights (I believe we both do), but rather in the different relative weights we each place on the value of privacy, which Dan (I'm supposing) would call an extension of freedom.

I wouldn't argue with her outline, though I think it is incomplete. I'm a big fan of privacy as a principle of a civil and just society, but I also specifically support financial privacy as a means to an end of encouraging better tax policy. Simply stated, politicians are much more likely to reduce or eliminate double taxation if they feel such taxes can't be enforced and simply put a country in a much less competitive position.

I'd go further and say the way to promote social good is to remove taxation on markets, as they only give more scope and power to the state, which naturally leads to a curtailing I individual liberties. Fiat tariffs and taxes only reduce economic efficiencies and drive costs to consumers up anyway. Few state interventionist policies beyond preventing monopolies and oligopolies (cartels) in markets do any measurable social good. 

Okay, so on to [my] answer of the subject of this post. Privacy—and financial privacy by extension—is important. But is it a human right? That's a big phrase; one which humanity has no business throwing around, lest it go the way of "[fill in blank]-gate" or "war on [whatever]." And as Dan himself points out, governments have a way of fabricating human rights—apparently some European courts have ruled that free soccer broadcasts and owning a satellite dish are a human rights—so it's important that we get back to [philosophical] basics and define the term properly. The nearly universally accepted definition of "human rights" was established by the Universal Declaration of Human Rights, which the United Nations adopted in 1948. According to the UN, "human rights" are those "rights inherent to all human beings," regardless of "nationality, place of residence, sex, national or ethnic origin, colour, religion, language, or any other status." The Declaration includes 30 Articles which describe each of those rights in detail. "Financial privacy" per se is not explicitly a human right in this document, but "privacy" is, and I think it's reasonable to include financial privacy by extension. But privacy is defined as a fundamental, not an absolute, human right. Absolute rights are those that there is never any justification for violating. Fundamental freedoms, including privacy and freedom from detention, can be ethically breached by the government, as long as they authorized by law and not arbitrary in practice. The government therefore has the right to regulate fundamental freedoms when necessary.

I'm not sure how to react. There are plenty of admirable provisions in the U.N.'s Universal Declaration of Human Rights, but there are also some nonsensical passages – some of which completely contradict others.

Everyone hopefully agrees with the provisions against slavery and in favor of equality under law, but Article 25 of the U.N. Declaration also includes "the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services."

That sounds like a blank check for redistributionism, similar to the statism that I experienced when I spoke at the U.N. last month, and it definitely seems inconsistent with the right of property in Article 17.

I'm not sure that what they are doing at the UN is any different that the wealth redistribution the American Left is calling for over here. Neither is morally correct, as they are both based on theft through taxation, redistributing false wealth to those wio have not worked to earn it. Hollingshead would do well to actually gain a philosophical background on these issues she argues, maybe by reading works like Rothbard's Man, Economy and State, or even better would be Mises' Human Action. 

I guess what I'm trying to say is that I don't care that the U.N. Universal Declaration of Human Rights includes a "right to privacy" because I don't view that document as having any legal or moral validity. I don't know whether it's as bad as the European Union's pseudo-constitution, but I do know that my support for privacy is not based on or dependent on a document from the United Nations.

As an aside, I can't help noting that Articles 13 and 15 of the U.N. Declaration guarantee the right to emigrate and the right to change nationality, somethings leftists should keep in mind when they demonize successful people who want to move to nations with better tax law.

Even the American Right would do well to grasp this idea and remove policies that prevent workers from emigrating to nations with wealth and need for workers. State borders are fiat, which I would call unnecessary and obstructionist to economic growth. Immigrants built the US, so preventing it from continuing by closing down the borders only restricts our ability to maintain a strong economy. Illegal immigration should be seen as the oxymoron that it is. 

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