Elitism is highlighted by the Paradise Papers

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Tax havens are the difference between those who can afford good lawyers and the rest of us. Like Pall Mall clubs, they have a prerequisite level of success or status, and their price of admittance: in this case, layers upon layers of consultancy and accountancy, and those with the leisure to spend all but eighty days of the year in Monaco. 

In the face of innovations like tax harmonisation, defenders of tax havens would contend, the natural greed of companies and individuals provide a service not only for themselves but for the economy as a whole. The problem with this is they’re not a method of generating wealth, they’re a way of hoarding it. The governments of tax havens aren’t interested in their impact on the overall taxation and regulation level of the global economy, that’s not how they see their role, they just want a rush of quick cash, and appeal to already rich to get it. If you want citizenship of Panama, you’ll have to pay for it, to get a permit to live in Jersey you practically have to be a multi-millionaire. 

This extends to the argument, beloved of their defenders, that tax havens encourage countries to be more ‘competitive’.  Suggesting a competition between Britain and the Cayman Islands rests on an entirely false comparison. A small country can attract a high enough concentration of tax-thrift companies so as to support its economy just by them being there. This just isn’t a viable option for a country like Britain. The chances of the elimination of corporation taxes all together in a country with a large, dispersed population accustomed to certain standards of public service and welfare is precisely zero. Monaco or Lichetenstein aren’t examples of nations playing the game, racing to the bottom to attract more business and investment, but rather the subversion of the game. Tax havens aren’t competitive, they’re cheating.

Something as obviously counter-intuitive to the values of the system that has, rightly or wrongly, been the political and economical consensus for the past thirty years favouring corporatism from on high rather than disruption from below as tax havens shouldn’t be something they’re naturally rushing to defend. Tax havens display all the worst ‘on high’ Corporatist tendencies of the system and none of the best bottom-up disruptive ones. Their argument would be most effective if they accepted the free market has a inclination towards certain flaws but generally the rising tide raises all boats. The ‘equality of opportunity’ it claims to provide is undercut if large companies have the resources to move their tax offshore and small ones don’t. There’s no obvious sequitur for their reasoning, it’s just capital for the sake of capital. It’s the leap into silliness from making a case to chanting a mantra. For the elements of the right that have often relied on the assumption its opponents are chasing pies in the sky and don’t understand ‘reality’, it’s a remarkably one-dimensional opinion. It depends on the assumption that certain developments are beneficial – cutting taxes, trimming regulation – as absolutes, and that any example of the above is unquestionably good. And so the argument for lower taxes becomes an argument for no taxes at all. 

It's emblematic of a wider tragedy of the right, particularly the intellectual right, whose one idea now seems to be that the only things governments should do is hollow themselves out. Perhaps they don’t realise how fragile their project is. Were it not for Ruth Davidson’s pick-ups for the Tories in Scotland, and if labour had taken just ten more seats in this year’s election, left leaning parties would have a majority and Jeremy Corbyn would be prime minister. You can kiss goodbye to your ‘competitiveness’ then. There’s every chance the Democrats could unseat Trump in 2020 with a quasi-Sanders or Warren-ite candidate if not one of the two themselves. 

This almost existential threat should be a time for introspection. But rather than attempting to understand why public opinion on the liberal settlement has shifted since the crash, some on the right have decided only to shout louder. Bludgeoning about the ‘service’ tax havens provide when they’re patently unfair in who they’re available to is but the most obvious example of this. Under threat, they fall back on the comfortable dictums they’ve always carried: cut, deregulate, simplify. Maybe they think this is a kind of strength, that when called into question the case for popular capitalism should be made, and made forcefully. Instead, it’s a kind of brittleness. The lashing out of the hyper-defensive. If in the case of calls to change the response is a shouted ‘no, let’s go further!’ it runs the risk of the rejection of the whole system. Tax havens aren’t the hill to die on. For wanting a nail, a kingdom could be lost.

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