- The drive against tax arbitrage is intensifying in the OECD countries, including the U.S.
- Tax havens are crucial to competition among global tax systems to attract investment
- Centralized sharing of tax data can fuel corruption and undermine Western security
The growth of global trade and the simultaneous rise of more sophisticated financial products from the late 1970s led to an increase in tax arbitrage by multinational firms and tax competition between governments. This phenomenon, most commonly known among policymakers as “base erosion and profit shifting” (BEPS), is a fixation of global bureaucrats and global governance do-gooders.
The conventional wisdom is that modern tax systems must ultimately be global. As the European Commissioner for Economic and Financial Affairs Pierre Moscovici succinctly put it: “The future of corporate taxation cannot be a unilateral, national or regional one.”
The seemingly innocuous push for international tax coordination and transparency will have costs that are hard to measure. More transparency means less privacy, slower economic growth and greater compliance costs.