Here’s a deligthful coincidence: In the same week, Mitt Romney’s VP candidate Paul Ryan declares “Let’s make this country a tax shelter!” and I find myself in the world’s most notorious offshore haven: Cayman Islands.
I came down here in search of Romney’s hidden money among the 137 entities that Bain Capital and its numerous subsidiaries and shell companies use to evade taxes and hide earnings. I expected to find the highly-unequal and poverty-ridden society of haves and have-nots that is characteristic of the Global South. Instead, I found a pristine and highly-functional island of diverse, good-spirited folks. 3.3% unemployment. Nearly no poverty.
So I have to agree with Paul Ryan when he says we should be more like Caymans, although perhaps we draw some different conclusions about how. For starters:
- Tax the bankers. Massively. In Caymans, they have no problem charging high-level executives $20,000 in work permit fees alone to cook books on their island. (On the other hand, primary school teachers pay no fees.)
- Use tax revenue to make citizens’ lives nicer. Like “musical performances at airports/boat terminals”. And “Life skills and vocational training for young parents” (Both in the budget here.)
- Stop wasting money on wars. Caymans doesn’t fight any.
- Universalize health care. Caymans’ Health Insurance Law requires all employers to insure their employees regardless of them being temporary or long term work permit holders, part or full time, or domestic workers.
So while havens like the Caymans undermine progressive taxation across the globe to the tune of more than $32 trillion, the island itself has one of the most progressive tax structures in the world: the super-rich pay dearly for their exploits while regular working folk get off mostly scot-free from taxation (those free-loaders!)
Of course, this is all only possible because the onshore world is massively subsidizing life in the Cayman Islands. Roads don’t build themselves. Police and firefighters are employed by governments with somebody’s money, and in this case the money is clearly either coming from tourism or finance, or some combination of the two. The myth of “tax competitiveness” is just that: a myth. If the United States became a tax haven, who would subsidize it?