The Economic Alamo
By Jeff Thomas, International Man
The relationship between government and taxation is a complex one. While many believe that governments are designed to serve the populace, it can be argued that their primary aim is to wield power and collect taxes. This perspective sheds light on the ongoing struggle for individuals to protect their wealth from the grasp of governmental taxation.
“And it came to pass in those days, that there went out a decree from Caesar Augustus, that all the world should be taxed.” – Luke 2:1, New Testament
“Since the beginning of recorded history, the business of government has been wealth confiscation.” – Ron Holland
It’s widely accepted that governments exist to serve their citizens, which often justifies the imposition of power and taxes. However, I contend that those in power primarily view taxation as a fundamental purpose of government, using the service to citizens as merely a rationale for their actions.
This dynamic is not new. Throughout history, rulers have continuously sought to expand their control over their subjects, extracting as much in taxation as they can. In response to this situation, it has become commonplace for individuals to seek ways to shield their wealth, regardless of its size, from such confiscatory measures.
Taxation, in essence, is legalized theft. It is never collected willingly, unlike voluntary contributions to charities or places of worship; it is enforced. (If you disagree, try refusing to pay your taxes.)
Centuries ago, those who accumulated wealth might have hidden it in their homes or buried it underground. In contrast, the advent of long-distance travel in the last century has led the affluent to adopt a more secure tactic: placing their assets in foreign countries where confiscatory laws are less severe, or better yet, nonexistent.
The Era of the Tax Haven Blossoms
Tax havens are not a recent invention; however, they gained prominence in the 20th century when they truly thrived. These jurisdictions have evolved into sophisticated entities that cater exceptionally well to their clients, becoming a considerable threat to larger countries with oppressive tax regimes. In response, these nations banded together to form the Organization for Economic Co-operation and Development (OECD). Ironically, despite its benevolent-sounding name, the OECD aims to dismantle tax havens and enforce uniform taxation across member countries while allowing itself the privilege of deviating from this taxation equality.
In recent times, the OECD has intensified its campaign against tax havens. Initially, it labeled these jurisdictions as centers for “money laundering,” implying that illicitly obtained funds were being concealed in foreign banks. (For an insightful analysis on this matter, see here.)
Simultaneously, the OECD has been quite selective in addressing the root causes of tax-haven business: the oppressive taxation policies of its member countries, which drive clients to seek relief from economic oppression.
The OECD has seen notable success; an overwhelming portion of the taxpaying public now views tax havens as mere sanctuaries for criminals and “tax evaders.” Recently, the OECD has also begun to associate tax havens with terrorism, a trend likely to amplify in the coming years.
However, the OECD faces new urgency in its mission to curtail the economic liberty that tax havens afford. With many member states squeezing their populations for every ounce of revenue, they have resorted to unmanageable debt as a quick fix, a move that mirrors the depths of addiction.
As this dependency on unsustainable funding escalates, these governments find themselves at a breaking point: their economic systems teeter on the edge of collapse while they struggle to support the weight of their overreach. Consequently, they are redoubling their efforts to rein in tax havens.
The Last Holdout
Recent years have seen a wave of legislation passed in the EU, the US, and other developed nations, granting greater capital controls and enabling the seizure of wealth by banks and governments.
Moreover, an increasing number of laws restrict individuals’ abilities to engage in financial transactions. Whether spending, receiving, depositing, or withdrawing, every aspect of transaction freedom is undergoing heightened scrutiny. The endgame could lead to a stage where one needs to seek permission for any financial transaction.
Since the early 2000s, several colleagues and I have monitored these developments, coining it “The Great Race.” The OECD nations are racing to dominate tax havens before an economic collapse triggered by their taxation policies and debt occurs.
If they fail to seize complete control in time, they may find themselves unable to exert that control afterward. While we have closely observed these dynamics for years, we still lack clarity about who will finish this competition… it promises to be a nail-biter.
It may seem that the outcome won’t matter significantly; after all, while the collapse of these economies isn’t immediate, it is certainly on the horizon. At some point in the foreseeable future, a trigger will likely topple their precarious economic structure. Thus, if tax havens were to be dismantled in the meantime, why wouldn’t they simply be re-established post-crisis?
The troublesome aspect is that if the OECD members prevail in the Great Race, the last refuge of economic autonomy—the tax havens—would be lost, and much of the wealth contained within may have already flowed into these faltering empires.
Like the gold lost in 17th-century Spanish galleons, it could take a long time for such wealth to re-emerge in the hands of those who create value. It would likely be squandered by the OECD rulers as they make their last stand for global economic supremacy.
This doesn’t imply that recovery would be impossible. Wealth, after all, is never truly vanished; it simply shifts hands. What is concerning is the possibility that, following the collapse reminiscent of the Roman Empire, there isn’t sufficient wealth distributed among productive individuals. Thus, a return to a vibrant, free market may be slow to manifest.
Historically, total collectivism has always led to sluggish recovery in its aftermath.
The race is on, and it’s monumental. Today, the world’s tax havens represent the last bastions—the Alamo—defending the free ownership of wealth. The coming years will determine whether they succeed in safeguarding economic freedom for generations to come.
Sincerely,
Jeff Thomas
for Economic Prism
[Editor’s Note: The landscape can change rapidly. New options may appear while others can vanish. Thus, staying informed with accurate information is crucial. This is where International Man steps in. Watch this free video to discover our recommended tax havens. The article was originally published at internationalman.com.
