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Carnival of Personal Finance #141

Liechtenstein tax inquiry spreading

Who would have thought that such a little country could generate so much tax interest and financial intrigue?

Liechtenstien_flag_in_map_shape2 I don't want to run this Liechtenstein tax evasion story (blogged here and here) into the ground since it doesn't directly affect most of us. But anytime folks are able to questionably shelter their income from taxation, then we all end up eventually paying.

So I feel compelled to note that, according to the Times of London, British tax authorities, like German investigators, have paid £100,000 (that's $196,576 in weak U.S. dollars) for information on about 100 accounts held at LGT Group by Britain’s richest families.

And the Wall Street Journal reported today that addition to Germany and the U.K., tax authorities in the United States, France, Canada and Australia also are investigating client data tied to LGT, which is owned by Liechtenstein's royal family and is the country's largest financial group.

Tax competition issue: The situation also has apparently triggered a broader tax debate.

"The Paris-based Organization for Economic Cooperation and Development is trying to use the imbroglio to resuscitate its initiative against tax competition," writes Daniel J. Mitchell, senior fellow at the Cato Institute, in the WSJ's European edition.

And some are using the issue, says Mitchell, "to push for the forcible annexation -- by nations like Austria and France, under some unknown authority -- of jurisdictions such as Liechtenstein, Andorra and Monaco."

Not a good idea, says Mitchell.

"Wealthy tax evaders may not be sympathetic figures, especially to those of us who meekly comply with the law. But low-tax jurisdictions serve a valuable role in the world economy," writes Mitchell. "Simply stated, they keep other governments honest. Globalization makes it easier for labor and capital to cross national borders, forcing governments to improve tax policy to keep the geese with the golden eggs from flying away."

Ah, to one day have the ability to figuratively and literally fly, first class, of course, to such a haven!


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