This is the Cato Daily Podcast for Friday, April 3rd, 2009. I'm Caleb Brown.

Many of the leaders attending the G20 Summit want to launch a new assault on low tax jurisdictions.

Hato Institute Senior Fellow Dan Mitchell at a March 23rd Capitol Hill briefing

argued that without the pressure of tax competition, higher tax nations would find it all too easy to enforce

oppressive tax laws. Tax havens, he argues, keep high tax nations from

undermining the U.S US economy.

The simple way to think about it is imagine you're back in your economics 101 class in college,

and you learned about monopolies and oligopolies and cartels and competition.

And you learned that if you had some sort of monopoly or oligopoly and say you only had one gas station in a town, that one gas station could charge high prices,

it could maintain inconvenient hours, it could offer shoddy service.

But if you have five gas stations in a town, all of a sudden those gas

stations compete with each other. They have to lower prices. They have to be

attentive to the needs of consumers instead of being attentive to just

imposing whatever price they want to impose.

We've seen the same thing internationally in terms of what's happening with governments

because of globalization and that's really the key. Well let me get to that slide in a

second because of globalization what's happening is that labor and capital are a

lot more mobile than they used to be and this means that taxpayers around the world if governments are

trying to impose high tax rates they actually have options to move

either themselves or their money across borders.

Just like if you have one monopoly gas station in a town and all of a sudden new gas stations

open up, you can decide I'm no longer going to shop at that gas station that's trying to

...