Republican presidential candidate Ben Carson said Wednesday that he hoped his tax plan would turn the United States into a tax haven.
In an interview with CNBC, the former neurosurgeon said he would drastically cut the U.S. corporate tax rate to between 15 and 20 percent. “I want us to become a tax haven for people because it also becomes an opportunity haven for people,” Carson said.
Praising tax havens as engines of opportunity is bizarre. The purpose of tax havens isn’t to invest in the local economy — it’s to park large sums of often ill-gotten money and do as little as possible with it. The economies of tax havens are a lot like the bank vaults they are built on — stagnant. There’s a reason that the Cayman Islands and havens like it are not centers of innovation and opportunity.
UC-Berkeley economist Gabriel Zucman estimates that $7.6 trillion, or 8 percent of the world’s total wealth, is held in tax havens. Avoiding taxes through tax havens in places like the Cayman Islands or Switzerland has many negative consequences. It exacerbates inequality, deprives countries — especially emerging economies — of deserved revenue to fund social programs and other investments, and undercuts the rule of law.
Carson also proposed a six-month tax holiday on corporate profits held overseas. American companies hold $2 trillion overseas, according to Bloomberg. Under Carson’s plan, precisely zero of that would be taxed for six months as long as 10 percent was invested to create jobs.
Tax holidays are a policy with an odd premise: They give companies who have been using complex schemes to avoid paying U.S. taxes for long periods of time a much simpler way to avoid paying U.S. taxes for a short period of time.
We’ve also tried them before, back in 2004. And as Matt O’Brien wrote, “it failed by any metric. Growth and investment didn’t increase. And even though corporations weren’t supposed to use these funds for share buybacks or dividends, because money is fungible, they did. That was good news for stock owners, but not workers.”
An economy based on sheltering wealth benefits few aside from the already-rich. It’s stagnant and inherently parasitic, but for some reason, Ben Carson thinks it’s a good idea.
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