Re: Corporations paying zero tax, a solution?
"you're talking about a different problem"
No I'm not. The situation you describe being transfer pricing, which is nought to do with capital flight, which is what will happen with any tobin tax.
"And as soon as the money leaves the tax-heaven to be used for something (like buying a Porsche or a Rolex) it's taxed."
It isn't. It really isn't.
You get one hit of the tax bong when the capital leaves. Let's call it a £1M transaction to keep the numbers small and easy. You tax that at 1% so you get £10k, and the transaction stands are a net £990k.
The capital from the transaction is now offshore and away from your sticky mits. You now get £0 on the £100M+ of transactions I use it for. You never get to tax any of those transactions or the vast bulk of the profits.
If I repatriate a small slice of the profit, you might get to tax that.... then again, you might not. I'd just buy the Rolex abroad and wear it home.
All you've really achieved is to drive the vast bulk of financial transactions offshore, driven taxes on profits and dividends through the floor, and offshored a lot of bank workers job. As a spite tax, it works very well indeed, but economically, it is nothing short of an absolute disaaster.
Biting the hand that feeds IT
