Financial Transparency Coalition

You’ve heard the story before. A corporation with something to hide uses a tax haven as a host for its phony subsidiaries. In the classic tale, it is for the purposes of evading millions in taxes. Sometimes the corporation exploits the tax haven for other evils, like hiding losses from investors. My favorite example is Enron’s executives, who used shell corporations with snazzy names like “Raptor” and “JEDI” to hide losses and fabricate earnings—with disastrous results. But never before have I heard of companies using tax havens to win U.S. government contracts. That sentence sounds shady...

If you’ve been following the melodrama surrounding the Bank of Kabul unfold, you’ll already know that the situation has (somewhat) stabilized. If you haven’t, here’s what you missed. Last week panic struck when President Karzai approved the dismissal of the Bank’s CEO, Sherkhan Farnood, amid numerous allegations of large scale corruption. According to high-level reports, top executives of the bank had been lending millions of dollars to the political elite for purchases of high-end real estate in Dubai. In the face of United Arab Emirates’ alarming real estate bubble, these investments are looking frighteningly sour. If...

What if there is a way to directly fund development that doesn’t involve foreign aid or philanthropy? A recent article in the Christian Science Monitor, written by the finance ministers of France, Japan, and Belgium, proposes just this. The authors suggest using innovative financing—which uses small taxes on large financial transactions, like purchases of airline tickets—to mobilize resources for development initiatives. Just how small can these taxes be? Recently, the Taskforce on Financial Transaction for Development reported that a levy of 5 cents on every $1,000 traded on the foreign exchange market could bring in more than $30...

As I have noted, there is a popular argument among advocates of tax havens that these jurisdictions provide a positive influence on the world through so-called “tax competition.” Mostly these advocates toss this phrase into their arguments with the misguided hope that those hearing it will not think too long and hard about it, because at the end of the day, it doesn’t make much sense. As far as I can tell, the most comprehensive definition of tax competition was put forward by Richard Teather, a tax specialist from the UK, in “The Benefits of Tax Competition.” Teather...