Getting Real about Taxes: Offshore Tax Sheltering and Realism’s Ethic of Responsibility

Abstract

This paper tackles the issue of offshore tax sheltering from the perspective of normative political realism. Tax sheltering is a pressing contemporary policy challenge, with hundreds of billions in private assets protected in offshore trusts and shell companies. Indeed, tax sheltering produces a variety of empirical dilemmas that render it a distinctive challenge for global governance. Therefore, it is crucial for normative political theorists to confront this problem. A realist approach offers three distinct advantages. First, it relaxes the theoretical burden by starting from the real practice of tax evasion, rather than from an abstract theory of equality or justice. Second, realism’s focus on power and its acceptance of coercion open up new strategies for addressing the problem than would be allowed by theories with a stronger emphasis on consensus. Third, if politicians fail to pursue effective reform, realism’s ethic of responsibility provides clear political reasons for why they should be held accountable.