Article • Dean Baker’s Beat the Press
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The NYT wants readers to be sympathetic to countries that set themselves up as tax havens for corporations who would rather not pay their taxes. In a piece on the problems facing the Cypriot banking system the NYT told readers that the Cyprus does not want to turn to the European Union for a bailout of its banking system because:
“In return, the Union might demand that Cyprus raise its 10 percent tax on corporate profits, a crucial selling point and key to an economy based on financial and business services like accounting.”
This is a strange assertion. A bloated state bureaucracy can be called a key to an economy that is based on a bloated state bureaucracy. This is not a basis for healthy growth, just as being a tax haven is not in general a basis for healthy growth.
There is no obvious reason to be more sympathetic to a government that wants to maintain a country as a tax haven than there is to be sympathetic to a government that wants to maintain a bloated bureaucracy as a patronage system. Neither provide a platform for healthy sustainable growth.