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Should tax-shelters be removed?

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  1. Introduction
  2. The similarities in the organizations
    1. Affirmation of the self and focus on communication and credibility
    2. Using similar tools
    3. The intrinsic and original differences
  3. Monetary strategies: similarities and differences
    1. ECB: the fight against inflation
    2. Fed: Growth and inflation
    3. Flexibility and a more pragmatic Fed
  4. Current crisis: common objectives erasing entrenched differences?
    1. Unprecedented rate cuts for ECB
    2. Fed adopts 'unconventional measures'
    3. Persistence of the 'Atlantic Wall'

The recent economic crisis in the contemporary world raises many issues in the financial sphere, since it originates there. The role of traders, bankers, deregulation, and the financial market, have all been mentioned, with more or less common sense or good faith. At the last G-20 meeting in April 2009, the French president, in agreement with other heads of state of the most influential countries in the world, announced that the list of tax havens held by the Organization for Economic Cooperation and Development (OECD) would be updated, as already requested in an earlier interstate meeting in Paris in November 2008 when the crisis had hit Europe with full force, just after the bankruptcy of the Lehman Brothers in the US and the nationalization of some banks in the UK (including the Royal Bank of Scotland).

The extent was quite expected, because these famous 'tax havens' were considered 'black holes' of finance, places where the most shameful embezzlements occurred, totally unknown to the general public and resistant to pressure from the most influential states. Faced with an archaic system, arbitrary and irregular general forms, the Anglo-Saxons of the time offered tax systems that were institutionalized, controlled by the parliaments or city councils. This allowed merchants, and traders to provide in their budgets the tax burden (this theory, put forward by North and Weingast, explain the early development of England in the 18-19th centuries).

It made more sense for the French or Spanish, to trade in Holland or England rather than France, because of this tax policy. Today there are tax havens around the world (usually small islands: British Virgin Islands, Bahamas, Hong Kong, UAE, Malta, Cyprus, Luxembourg, Liechtenstein, etc). The list varies according to the organization from which it originates: the IMF, OECD, ATTAC and even takes a typology of tax havens.

The OECD is the most "official" because it includes ranking of countries according to their degree of cooperation (in the fight against organized crime and money laundering, for example). France has, according to some, tax havens, with the islands of French Polynesia and Wallis and Futuna, which do not apply the income tax or wealth tax, no rights succession.But the first clear example of tax haven of Monaco is, of course, neither the capital nor income has been taxed since 1868.

Therefore, for a French company (also for individuals), the fiscal attractiveness of the principality is understandable: 34.4% profit in addition, it cannot be refused easily (or 50% of its revenues and more). However, it should be noted that since September 2009 (G20 Pittsburgh, USA) and the establishment of international financial standards on taxation, Monaco is renowned as the country to meet the criteria for good performance tax.

The small state is nevertheless firmly rooted in beliefs as a tax-neutral territory, where all the maneuvers of dubious tax avoidance and evasion or money laundering, are held. There is therefore a terrible confusion between tax haven and banking haven.

Tags: economic crisis, OECD, Royal Bank of Scotland. Archaic system, Monaco, performance tax

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