A Taxing Error

The European Union is making one. Again.

Of the EU-27, France, Poland, and Denmark have so far proposed barring companies that are based, or have subsidiaries, in tax havens from receiving coronavirus-linked bailouts. Italy may soon join them after Foreign Minister Luigi Di Maio added his voice to calls to tackle tax havens.
Meanwhile, the European Commission confirmed on April 24 that its existing rules allow individual EU countries to block coronavirus aid from going to companies based in tax havens.

Whether such companies should be eligible for Wuhan Virus-related bailouts is a separate question. Whether there should be Wuhan Virus-related bailouts at all is yet another separate question.

What’s of particular interest to me is this claim by so-called “tax experts:”

[S]uch national measures could help boost transparency and moves toward a level playing field in global corporate taxation.

It’s inconceivable to these folks that another way to achieve a level playing field in global corporate taxation is for high-tax nations to lower their tax rates rather than trying to compel low-tax nations—those putative tax havens—to raise their own tax rates.

After all, these personages, seem to insist, competition is all well and good, except when it’s inconvenient to Government. The convenience, the outright benefits, to the citizenry of competitive outcomes—lower prices, better quality products, a broader array of them—is immaterial to these personages. As is leaving more money in the hands of those unwashed citizens by inflicting lower tax rates on them.

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