April 08, 2016

Do Gillian Tett and other really believe that ever-growing offshore cash piles, is cash stashed away under mattresses?

Sir, Gillian Tett writes: “overseas profit piles have swelled — to more than $2tn”; and from there she jumps to: “in the real world introducing a repatriation deal — even at a mere 10 per cent — would almost certainly be better than the dismal status quo: a world of ever-growing offshore cash piles, transatlantic tax battles and lousy infrastructure does not suit anybody.” “The clampdown on tax inversions is only a start” April 8.

But Vanessa Houlder informs: “Over $1tn of cash has been booked offshore, even if the money is held in US banks or Treasury bonds.” “Tax havens seen as ‘grease on wheels’ of cross-border trade” April 8.

All those “overseas profit piles” have, in some way or another, already been deployed and so, to redeploy these, means having to liquidate their current positions.

What if the “more than $2tn” had all been invested in public debt and you repatriated all of it and the government got a 10 percent cut on it?

Then of course governments would owe ‘more than $200bn’ less, but if they for instance wanted to better any “lousy infrastructure”, then they would have to sell fresh public debt in the market. And, since the stockpile-holders have been diminished, that would most certainly imply having to pay higher interest rates. That is of course, unless governments are not assisted by banks holding it against zero capital requirements, or central banks buying up public debt for the governments own “stockpiles of cash”.

It is amazing the kind of demagoguery that is floating around. It is dangerously divisive. At the end of the day what it really comes down to, is who is going to decide on how any accumulated wealth is to be redeployed, whether the private or some government bureaucrats.

I truly believe that current governments waste, represents much more lost value than what is inappropriately or illegally diverted into these oh-so-horrible “stockpiles of cash”. And so I would like to see the expected repatriation profiteers kept at bay. Perhaps all citizens in some Universal Basic Income/Wealth scheme could share the governments’ cut of any repatriated assets?

And by the way, what are we to do with Putin’s “stockpiles of cash”, those that might be fully invested in the US? Send it back to Russia to Mr Putin?

Do these comments mean that I condone what distorts or what is illegal? Of course not! All tax systems should be improved and all taxes should be paid! There are occasions though in which I find it quite relevant to ask: How much failed nation or tyrannical government is needed for citizens’ capital to be granted immediate asylum?