Tax Justice Network Taxcast, March 2017: Brexit and Tax Havens; Losses to Tax Avoidance
by Kenneth Thomas
Tax Justice Network Taxcast, March 2017: Brexit and Tax Havens; Losses to Tax Avoidance
Will Brexit harm the City of London’s tax haven? With weak regulation, money laundering, and satellites like BVI, Cayman Islands, and Jersey, everyone knows it’s already a tax haven. The UK is threatening to be more of a tax haven if they don’t get their way on other issues in the Brexit negotiations, but the EU will be vigilant on this issue, in John Christensen’s opinion. He notes that the General Agreement on Trade in Services (GATS) does not guarantee trade in most financial services. He says UK suffers from finance curse (like the resource curse increasingly studied in political science). He predicts that the EU will find it easier to regulate financial services after the UK is gone.
The cost of the financial crisis was $6.5-$14.5 trillion, according to calculations by Gerald Epstein, of the University of Massachusetts, Amherst. The bailout enabled finance to make profits far beyond what was justified based on the risk banks took on prior to the bailout. Economic rent has been generated through excess compensation, drawing more top graduates into the sector. Private credit/GDP over 90% or so leads to lower economic growth. The U.S., UK, and Iceland all had been at 200% of GDP.
“Overcharged? The High Cost of High Finance” is the name of the report.
Listen to the entire broadcast here.
I listened to it the other day. The biggest number is 22.7 trillion is the cost to the economy by finance being to large a part of the economy from 1990 to 2023.
I have pointed out with my posting here at AB that finance had to be put back in it’s place. Said place being in support of a production economy and not as part of the production economy.
In the end, truthfully, we don’t really need banks. They make using money as a medium for social exchange easier and convenient, even allow bringing the future to the present, but they don’t actually produce anything that becomes organic to living life. They just make money from money.
I am certainly in favor of breaking up the “too big to fail” banks, but the Trillion Dollar Question is, How do we reduce the ratio of private loans to GDP? (The assertion, for those who have not had the time to listen to the broadcast, is that a higher ratio is a drag on growth.)