Saturday, February 24, 2001
Anti-Tax Group Goes Global
by Louis Jacobson
Bush Administration officials take notice. A new conservative
group calling itself the Center for Freedom and Prosperity is sending a pointed message to the White House and to the Treasury Department: Washington isn't the only anti-tax battleground.
Buoyed by support from House Majority Leader Dick Armey, R-Texas, and Senate Majority Whip Don Nickles, R-Okla., the center's officials-led by prominent conservative
J. Mitchell-have spent the past few months traipsing from Washington to Paris to the Caribbean on a mission to stop international attempts to put new restrictions on small nations that are "offshore" banking centers. Highly-taxed European countries of the Organization for Economic Cooperation and Development are pushing the restrictions. Mitchell and his colleagues argue that such restrictions will hinder the flow of global capital, thus removing a key marketplace lever that keeps taxation levels low.
"We're for fiscal liberty, financial privacy, and
national sovereignty," says Andrew F. Quinlan, the center's president and CEO. "We fear that if all countries have the same tax rate, the tax rates will go up because there will be no competition."
The CFP has also picked up the cudgel against a proposed Internal Revenue Service regulation that would require U.S.
financial institutions to report to foreign governments the interest income that nonresident aliens receive. Quinlan argues that tax policy changes should not be decided by "bureaucrats seeking to advance an ideological agenda of worldwide taxation."
The center has some Capitol Hill clout in its corner.
Nickles recently wrote to Treasury Secretary Paul H. O'Neill and requested his department's cooperation in fighting the proposed OECD restrictions. The center's Web site also displays an endorsement from Armey. And Elizabeth Tobias, an aide to Armey, joined Mitchell and Quinlan in Barbados at a January summit on offshore banking.
Mitchell and Quinlan are well-seasoned veterans of Washington's policy wars. Mitchell, the new center's chair, is
keeping his full-time position as the McKenna senior fellow in political economy at the Heritage Foundation. Mitchell is "exactly the right guy for the job because he's built up 20 years of credibility in the tax community," says Stephen Moore, another leading supply-sider.
Mitchell helped to organize in 1997 a flat-tax working group that included roughly 200 trade associations. Quinlan, a
one-time Joint Economic Committee staffer, headed the grass-roots group CapitolWatch, which advocates a tax-free Internet and ending the estate tax. William P. Jarrell, a lobbyist and CapitolWatch board member, calls Quinlan "a very good complement" to Mitchell.
Mitchell writes economic studies for the center's
educational affiliate and helps gin up support among other conservative think tanks. Quinlan handles the day-to-day running of the organization. Veronique de Rugy, a George Mason University research fellow, handles outreach to academic and foreign parties.
Mitchell won't disclose the center's sponsors, saying his
donors "are confidential because we believe in financial privacy." But despite the group's hefty travel bills, he says the center's budget is "less than $100,000." Quinlan adds that the center is "raising money from interested people in the U.S., from multinational companies, and from anyone who thinks this is an important issue."
The center's big mission is to oppose the efforts of the industrialized nations acting through the Paris-based OECD, which has threatened to impose sanctions against
Caribbean nations and other jurisdictions that levy taxes at rates significantly below those in the industrialized world. These "tax havens" also do not give industrialized nations'
investigators unfettered access to depositors' financial records.
Critics cite the hazards of criminal activity in offshore
banking. But representatives of offshore-banking nations-and their supporters at the center-say the governments of OECD member countries really fear that their citizens avoid taxes by putting their assets in offshore banks.
Clinton Administration Treasury officials were among the leading supporters of the OECD's effort. But with George W. Bush
in the White House, Mitchell and Quinlan hope to change Treasury's mind.
"When you've got other things on the front burner, there's always some risk that the career bureaucrats at Treasury
will continue running with the ball," Mitchell says. The center wants "to tackle those ball carriers, making sure that O'Neill and [Bush economic adviser] Larry Lindsey sit up and take notice."