So the elephant in the room here is that the US is increasingly a tax haven. Not for US citizens. For everyone else.

The reason? The US might throw it's weight around with FATCA and many things before it to get even moderately sized transactions reported to it and to have assets of US citizens reported but the problem is the information doesn't go the other way.

So the result is those dodging taxes in the EU will probably treat the US as a financial shield to hide wealth from their governments.

I'd really like to see non-US residents putting money into real estate pay a huge tax, to discourage purchase of condos and single family homes. There's no reason, to purchase these items and leave them empty, as a hedge against whatever is going on in their country. I'm not exactly sure where to draw the line, but if you send a kid to the US for school, and they live in your condo/house, that's fine. But, do we want speculators from outside the country purchasing and leasing back to US residents? Seems like a bad recipe.

Not sure why "speculators from outside the country" are worse than those from inside the country. Personally, I would prefer we encourage efficient land use by everyone, regardless of their nationality.

One elegant taxation system to accomplish that is the land value tax: https://en.wikipedia.org/wiki/Land_value_tax

isn't the most efficient land use just letting the free market work without taxation? if land is best used as a store of value for someones money then thats what it is.

A main issue of leaving these things to market is capital accumulates and centralises. We see this today with the ongoing mega merges and in days of old where (in many countries) a handful of people owned all land. Whether or not you care about this is your political ideology but this is the long term history and likely future of unregulated markets.

https://en.wikipedia.org/wiki/Capital_accumulation

Land is required for things necessary to human existence and it's not really possible to make more of it so if the market determines that the "best" use of it is for storing money society should probably step in and overrule the market.

Uh huh.

That's all well and good until someone decides to apply that reasoning to something else, like, say....the Internet.

You really think all that wireless spectrum is finding it's best use sharing cat videos? High-bandwidth video emojis?

They aren't making any more RF spectrum either.

One man's "common sense solution" is another man's "free market distortion".

And there is PLENTY of land to go around....so.....bad example. You could give nearly every single person on the planet plenty of room to live in Texas. That's without going vertical into multi-story buildings.

Ultimately the best use of people's labor is whatever they want to do with it. If that's buying houses, great. Beanie babies, faberge eggs, gold ingots, whatever.

Do you really need all that crap you own?

Sure you can "nearly every single person on the planet plenty of room to live in Texas" but they would be devoid of infrastructure and it would be incredibly expensive to service people's homes if they're spread out across the states. It's a cop out to say 'there is plenty of land' when it requires a hell of a lot of work to bring it modern services. If you think your simplistic land argument is a good one you should revisit other beliefs as well.

RF spectrum is highly regulated, by the way.

Less than you might think.

It's treated like real-estate with RF "zoning rules".

But very wide swaths of the RF spectrum are essentially a free -for-all. You could argue that the most valuable parts (UHF) are used for stuff that could only be described as "non-essential" e.g. cat videos.

I am not aware of any ways in which wireless RF spectrum is required for humans to survive.

The rest of your post is non-sequiturs that I'm not going to bother engaging.

Radio announcements of hurricane warnings and other natural disasters for example.

Does the amount of required spectrum for this rise with a higher population or does it remain constant?

Not necessarily. The problem with land is that you can’t make more of it, and owning it allows monopolistic use, and thus rent seeing behavior from landlords and deadweight loss. The LVT if properly implemented will capture the dead weight loss given to landlords.

Well, there is already high tax on real estate in Switzerland and it doesn't stop wealthy foreigners from buying condos/houses and keeping them empty. Not if the place is nice enough.

"There's no reason, to purchase these items and leave them empty, as a hedge against whatever is going on in their country."

Not even as a hedge against whatever is going on in their country?

I think the point was there is no reason that would benefit US citizens.

On that point I mostly agree, though I'm sure there are some small benefits that accrue - almost certainly cancelled out by the disadvantages though.

Since ~1/3 of American wealth is in homes, I’d imagine that most homeowners are not for a scheme that would cause their wealth to decrease (or restrain its rise)

Anybody who owns real estate isn't concerned with foreign buyers. They help keep prices for real estate higher which amongst real estate owners creates additional wealth. For people who don't own real estate, those higher prices make it more difficult for them to get into a home so there are positives and negatives in this.

That said, I think the old "unoccupied houses" thing is way overblown. It presents the most ugly side of foreign real estate ownership so that people who are priced out of the market get angry at all of the foreigners buying property. Even if you removed every unoccupied SFH (single family home) from the market, prices, generally, would still be rising.

It's sort of like saying that the reason that a car costs so much is because the demand is high based on too many families owning more cars than they need. It gives people a target for their dissatisfaction with current auto prices but really isn't the main issue and even if you solved for that issue it wouldn't dramatically impact auto prices.

But having a target for your anger is a wonderful way to distract people.

I hear this kind of stuff from folks who don't really understand why offshore entities are useful in any number of scenarios for perfectly legitimate reasons.

I also hear it from folks who have never had to deal with the heavy handed tactics of a government that unabashedly tries to extort money from pockets it considers "deep enough" to pick.

You might think those tax dollars find their way to useful social programs. You'd be wrong. More often than not, they're used to prop up favored industries or enrich politically connected individuals.

I don't condone tax cheating. But I absolutely condone jurisdiction shopping if it helps to keep funds in the hands of those that earned it. I know that'll make me unpopular with a certain vocal minority but those folks haven't ever bought me so much as a cup of coffee so I think I'll live.

> folks who have never had to deal with the heavy handed tactics of a government that unabashedly tries to ...

the Swiss banking act that guaranteed secrecy to customers of Swiss banks were intended to protect information about the Jewish people from Nazi Germany. This act is now ineffective since Switzerland has harmonized reporting rules with both US and the EU several years ago. Singapore was also grey-listed with other popular tax havens and they too had to moderate their banking secrecy to get on the white list. you'd be hard pressed to find a useful bank anywhere in the world that isn't FATCA compliant.

>I know that'll make me unpopular with a certain vocal minority but those folks haven't ever bought me so much as a cup of coffee so I think I'll live.

Great attitude, sir. But who will build the roads? ;)

The asymmetry of FATCA is unbelievable. The US is bullying the banks of European countries by forcing them to report to US agencies the bank accounts of US citizens or US residents. Either the foreign banks comply, or they ask the US person to close his/her account.

Some EuropeanS with a link to the US have to move their bank accounts or investments accounts to the US because the European banks literally kick them out of fear of not being able to comply with FATCA.

So true. As an American who has spent close to a decade living overseas, opening a bank account in a foreign country has become increasingly difficult. I'm not hiding money. I'm not doing anything shady. I have a legit job working in another country and nobody wants to do business with Americans because of FATCA.

If I understood correctly, this says Vanuatu is unhappy that it got gray-listed for dubious tax practices, whereas other tax havens weren't. This will affect the price of "imported food, such as rice, and fuel."

> The offshore financial sector kicks in only about 4 percent of the country’s annual output of roughly $800 million, but its existence requires an ultralow tax environment that deprives the government of some revenue.

Not sure I get this. I don't see a rational reason why such tax havens should exist in the first place. If efforts are made now to regulate them, surely that's a good thing. Hope they will be able to transform their economy anyway.

These are small countries with a number of sophisticated ex-pats who have placed themselves in positions of power to control local regulations. The result of this control is an influx of offshore funds which they manage as financiers, local board members, solicitors or other enabling corporate professionals.

These individuals make very respectable incomes doing very little work living in an area with a rock-bottom cost of living and propagate their status in society by imposing regulations that lock in the need for their services, like local directorship quotas for local companies. An individual can sit on 30~ or so local boards for $20,000 a year each with a PO box for an office. That's a cool half-mil per year to sit on the beach, drink out of a coconut, and read a few pages of board materials a day.

This isn't the case for all companies, but it sure is the case for some.

Even if what you describe sounds terrible and immoral, thing is, it's not illegal, and it's a consequence of how our capitalistic/bureaucratic system works. Let's fix the root cause instead.

indeed - it has been pointed out elsewhere that slavery/ beating your wife/ ... used to be illegal. It is up to us/ our democratic system to fix this.

You can enforce international laws about human rights, but not about economy.

Sure you can. We just don't. If you think the EU and the US couldn't get an international tax harmonization treaty that allowed countries to follow revenue into specified haven countries and tax the cash flows where the revenues were generated, you're nuts.

Viewed as distinct, large nations have a fuckton more negotiating leverage than Vanuatu's financial industry.

The real issue is that Vanuatu and other similarly placed tax havens aren't distinct. They are run by sophisticated professionals for capital holders in developed countries.

Those are the same people who are at the bargaining table; those who know about the issue in depth or that have substantial capital involved all benefit from the wealth extraction the current international regime provides.

Interesting.

I suspect that the declared tax revenues of the financial sector are just a small part of the picture. It is likely that much of the enabling infrastructure, like agencies that register companies, nominally belong to the "legal" sector, and perhaps to avoid detection, some others may be misclassified as well. Then, of course, there are lawyers. And since many companies are used as flow-through vehicles solely for money laundering, these can be counted as part of the shadow financial sector as well; while the taxes they pay are not high, they still pay some kind of taxes (say, in single digits?), and the sheer volume makes it worthwhile.

If I were to assess the actual share, I would go by elimination: everything sans tourism, minuscule local food production industry, and transportation.