When California had a Magnetic Tax System
"Opportunities for International Financial Centres in the 21st
Keynote banquet address at the Conference on the
Fundamentals of International Legal Business Practice
, hosted by
The Bahamas Bar Association, in association with The
International Bar Association, The Bahamas Financial Services
Board, The Organization of Commonwealth Caribbean Bar
Associations, and The Inter-American Bar Association.
Breezes, Nassau, July 16, 1999.
The OECD says a "harmful tax regime" is one that "attracts
Many of us see that, rather, as a mark of a
good system, but I'll return to that.
First, let's follow them
along a way.
Right away we think of low taxes, and that is what
the OECD means - on p.27 they specify low income
and allied international organizations like the EU, also have a
history of jumping nations whose VAT is too low to suit them.
That view is too simple by far.
Mexico, for example, has
very low taxes, but repels both capital and labor anyway.
nation may also attract mobile activities and factors in two
One is by offering superior public services.
for example, is how many of us became Californians, lured by the
The other is by a tax structure
mobile activities without stinting on public services.
be done simply by targeting taxes on IMmobile resources.
inspect those points closer.
Magnetic tax structures
The U.S.A. is a great laboratory for testing tax
It contains 51 or more separate systems, with free
migration of labor and capital guaranteed by The Constitution.
The extraordinary growth of California from about 1900 to
1978 shook and recast the economy of the U.S.A., and parts of
the whole world.
It was not done with low taxes and skimpy
It was in part the product of a tax structure
that was Magnetic (compared with other states).