Taxing False Premise

The US is about to join an international tax collaboration scheme involving the People’s Republic of China, Australia, Japan, and Great Britain that’s designed to improve tax collections from multinational corporations. It’s also designed to increase government reach into private enterprises and government control over them.

Leave those last two design purposes aside, though.

Australia’s Commissioner of Taxation, Chris Jordan, said this about the scheme:

This collaboration has allowed us to better understand what is happening in our own countries and determine whether what is being represented in one country reflects what is being represented in another.

Fair enough. Nations of laws, as most of these participating nations are, should be able to enforce their tax laws, also, and the taxees ought not be telling conflicting stories to differing jurisdictions.

The Wall Street Journal at the above link cited “some estimates” as claiming that “the world’s governments lose US$3 trillion in tax revenue a year” to multinationals’ moves to adjust their own revenue collections to the most favorable tax jurisdictions.

And therein lies the false premise. In free countries—the US, Great Britain, Australia, and Japan in the present context—it’s not the government’s money; it’s the tax payers’ money, and they only allocate some of their money to their respective governments as tax payments. The governments aren’t losing a dime to legal tax payment minimization or avoidance schemes. It isn’t possible for them to lose what isn’t theirs in the first place.

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