Gimme shelters: benefits of tax havens.

AuthorSanchez, Julian
PositionCitings - Brief Article

LOW-TAX ZONES such as Hong Kong, Ireland, and various Caribbean nations are routinely blasted as "tax havens" by such groups as the Tax Justice Network, to say nothing of politicians, who resent them for siphoning away economic activity and depriving high-tax nations of "their" precious tax revenues. Recent work by a University of Michigan economist suggests this hostility is misplaced.

James R. Hines, in a National Bureau of Economic Research (NBER) paper co-authored by Mihir Desai and Fritz Foley of Harvard Business School, found that "haven activity does not appear to divert activity from non-havens." In fact, their calculations indicate that "firms establishing tax haven operations expand, rather than contract, their foreign activities in nearby countries." When firms can reduce their...

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