"Buy your holiday apartment and get a passport thrown in for free..." - QWealth Report

RANT AGAINST A BLOGGER - As published by QWealthReport.com Written by Peter Macfarlane

“So, buy your holiday apartment and get a passport thrown in for free with no worldwide taxation. Now why would that appeal to anyone?” asks one Richard Murphy. While this sounds like a darned good deal to me, of course, taxation is unfortunately generally based on where you actually live, rather than your citizenship (The USA being the only exception, as regular readers well know.). 

Mr Murphy, who describes himself as the “#1 Economics Blogger in the UK,” wrote a piece yesterday about this very program. 

It grabbed my attention because he makes some interesting points. “... [I]t shows just how tax haven activity is designed to undermine the very notion of the state whilst exploiting the power of the states that tax haven abuse captures to do so. The paradox and hypocrisy is all too apparent.”

That's a rather complicated sentence to get my head around before I've even finished my morning cup of Duran Cafe de Altura, but I think what he is trying to say, is that it's ironic how one state (SKN) is using one of the key tools of state control (the power to grant and withdraw citizenship and passports) to sell freedom to citizens of other states. In other words, they are playing the system.

“Reducing the state and its processes to a commodity is part of the process of destroying it,” he continues.

Totally agreed. Where I'm sure I differ from Mr Murphy is on whether that's a good thing or not. Personally I'm all in favour of seeing most of today's overbearing states having their wings clipped. No matter whether we are talking about China or Russia, the US, the UK, or even St Kitts. Less centralized government and more power to the people would make the world a much better place.

Really, however, what Mr Murphy and I believe counts for nothing. The nation state system that he so vehemently supports and that I tolerate because I don't have any other choice is founded on respect for the sovereignty of other nations. Or, appropriately for today being Mexico's independence day, in the words of Benito Juarez, "Among individuals, as among nations, respect for the rights of others is peace."

If Mr Murphy would have more powerful nations tell the good people of St Kitts and Nevis and their government how they should run their tax systems, is that respect for democracy? Surely he's not going to try to argue that one. By the same token, China is much bigger so perhaps it should dictate the rules in the UK? Then there would be no more of those pesky complaints about human rights abuses that are whittling away the authority of the Chinese state.

If we are going to respect democracy, we can't get away from having to respect the right of nations and peoples to self-determination. Therefore there will always be tax havens and commoditisation of the state and its processes. We will undoubtedly see more and more business being done offshore, not less. That is the fundamental reason why people who claim tax havens, offshore bank accounts and the like have had their day are totally wrong. The 'tax justice' people have never come up with any plan for forcing other countries to do or not to do things without trampling on their sovereign or democratic rights – because it's just not possible.

So what can Mr Murphy hope for?

He can certainly lobby his government to introduce domestic laws to stop its citizens doing business in tax havens. Fortunately, the British government may be stupid, but they're not that stupid. 

Would they introduce American-style worldwide taxation on British citizens? That's not beyond them. But every time they chop away at the freedom of British entrepreneurs to do business overseas, they know there will be a planeload of Britain's best and the brightest on the way to St Kitts, and other places like it, with their money. They will be closely followed by another plane full of Russian expats leaving London – another few billion pounds lost from the British economy at a stroke. The climate's better in St Kitts and I'm not just talking about the temperature! People and capital are highly mobile and will not stand for infringements on their freedom.

The other option is to introduce a tiered system of first and second class nation states. The privileged states like the UK will dictate how the others like SKN run their tax systems, citizenship laws and everything else. The only way to achieve this would be by the use of military force, or perhaps trying to scam the second-class nations with massive-scale bribery with billions of newly-minted fiat currency would work. The logical conclusion of this is that we would all live in one world dictatorship. But by then commercial space travel will be viable and the Tax Justice crowd will have off-planet tax havens to contend with.