The Market Center Blog

Coalition for Tax Competition
(Organizations affiliated with Coalition for Tax Competition listed below)

(Coalition letters & statements linked below)

What is the Coalition for Tax Competition

The Coalition for Tax Competition is bringing scores of policy experts to the cause of tax competition. Our coalition partners represent millions of contributing individuals, work with members of Congress and legislators in all 50 states as well as international politicians and reach hundreds of millions of taxpayers worldwide through their respective media programs.

The Coalition for Tax Competition now includes more than 35 influential organizations around the world. The CTC coordinates the resources of free-market organizations that produce research, work with policymakers, and inform the general public on matters pertaining to tax competition, financial privacy and fiscal sovereignty.

Why is the Coalition needed?

Because it is increasingly possible for people to shift their economic activity across national borders, governments face pressure to reduce tax rates in order to keep investment and entrepreneurial talent from moving to lower-tax environments. This is what is known as tax competition and it is an important check on excessive government.

High-tax nations, not surprisingly, want to stop tax competition. Working through the European Union (EU), the United Nations (UN), and the Organization for Economic Co-operation and Development (OECD), these countries are seeking to dictate tax policy around the world in order to protect themselves from competition.  The OECD, UN, and EU all believe that high-tax governments should have the right to tax income earned in low-tax jurisdictions.

The international bureaucracies are wrong. Competition, privacy, and sovereignty are inherent features of a free society. When governments collude, taxpayers lose. This is why tax competition between countries should be celebrated, not persecuted. 

Consider what happened, for instance, when President Ronald Reagan and Prime Minister Margaret Thatcher dramatically reduced income tax rates about twenty years ago: Every other industrialized nation was forced to lower tax rates. In most cases, this was not because politicians wanted to increase economic freedom. Instead, they felt compelled to make these changes because investment and entrepreneurial talent was flowing to the United States and the United Kingdom.

Fortunately, the international bureaucracies have no power to impose their tax harmonization agendas. A global tax cartel will not work so long as key nations do not participate - particularly the United States. This is why the Coalition for Tax Competition has mounted an effective education campaign designed to help U.S. lawmaker understand why the OECD, EU, and UN agendas are contrary to America's national interests.

The international bureaucracies' campaign against tax competition is ill-advised for a number of reasons. For instance, it is:

• An Attack on Taxpayers. The OECD is trying to create a cartel of high-tax nations. This arrangement – sort of an OPEC for politicians – would mean higher taxes and undermine any hope for meaningful tax reform.
   
• An Attack on Free Trade and Global Commerce. The OECD urges member nations to penalize low-tax regimes with severe and discriminatory financial protectionism. In effect, the OECD wants to impose a financial blockade against targeted nations. 
   
• An Attack on Sovereignty. The OECD not only is trying to bully "tax havens" into raising their tax rates and eliminating financial privacy, but also asserts the right to interfere with American tax laws. Sovereign nations should be able to determine their own tax policies. 
   
• An Attack on Privacy. An implicit feature of the OECD campaign is that governments should be allowed to tax income and activities that take place outside their borders. This means that privacy will be sacrificed to make life easier for tax collectors. Moreover, governments want to force financial service companies and professional service providers to spy on their customers to help track down additional tax revenue.

A list of organizations affiliated with Coalition for Tax Competition is listed below. The list is followed by a summary of the 10 coalition letters sent to the President and Members of Congress:

For more information, or to join the Coalition, please contact us at ctc@freedomandprosperity.org.

Organizations affiliated with Coalition for Tax Competition

		The Heritage Foundation
American Enterprise Institute		Independent Women's Forum
American Legislative Exchange Council		Institute for Policy Innovation
Americans for Tax Reform		IRET
American Shareholders Association		National Center for Policy Analysis
Association of Concerned Taxpayers		National Retail Sales Tax Alliance, Inc
Capital Research Center		National Small Business United
Cato Institute		National Tax Limitation Committee
CF&P Foundation		National Taxpayers Union
Citizens for a Sound Economy		The Performance Institute
The Club for Growth		The Potomac Foundation
Coalition for Tax Competition		Privacilla.org
Coalitions for America		Public Interest Institute
Competitive Enterprise Institute		60 Plus Association
Council for Citizens Against Gov't Waste		Small Business & Entrepreneurship Council
Discovery Institute		Southeastern Legal Foundation, Inc.
Empower America		The Sovereign Society
Free Congress Foundation		United Seniors Association
Freedom Alliance		U.S. Chamber of Commerce
Frontiers of Freedom Institute

Coalition Letters & Statements

19) The Center for Freedom and Prosperity Foundation, joined by many of the nation's most influential free-market and taxpayer groups, has sent every United States Senator a letter warning about the adverse impact of anti-investment provisions in Senator Reid's "Jobs" Bill.

The Coalition for Tax Competition letter highlights the inclusion of provisions taken from the "Foreign Account Tax Compliance Act."  These provisions impose a stiff thirty percent withholding tax on the investments of foreign financial institutions unless they agree to onerous and intrusive reporting requirements with the Treasury Department.

Additionally, the letter points out that these provisions create significant threats to fiscal sovereignty and financial privacy. European governments and bureaucrats are increasingly meddling in the affairs of American companies, so setting a precedent for further interference seems particularly foolish.
February 23, 2010
http://www.freedomandprosperity.org/ltr/reid-sa3310/reid-sa3310.shtml

18) The Center for Freedom and Prosperity Foundation, joined by 21 of the country's most influential free-market and taxpayer groups, has sent a letter warning President Obama, Treasury Secretary Timothy Geithner and top Congressional leaders "about the fiscal and economic risks of a value-added tax (VAT)."

The Coalition for Tax Competition letter is in response to a growing push for the implementation of a VAT in the United States.  The letter examines the failed history of VAT's in Europe and finds that VAT's have traditionally been associated with large increases in the overall tax burden and level of government spending. The letter concludes that " the United States should not repeat the mistakes of Europe…bigger government and higher taxes would mean sluggish economic performance and lower living standards."
December 4, 2009
http://www.freedomandprosperity.org/ltr/vat2009-12-04/vat2009-12-04.shtml

17) The Center for Freedom and Prosperity Foundation, joined by 31 of the country's most influential free-market groups, has sent a letter urging the World Bank "to stand on the side of tax competition and fiscal sovereignty and not for bigger and more intrusive governments."

The Coalition for Tax Competition letter is in response to an upcoming World Bank study on the relationship between so-called offshore financial centers and economic development (see fact sheet below on the study). Done properly, such a study shows that low-tax jurisdictions and tax competition promote global prosperity. Unfortunately, the people pushing this study have an anti-liberalization agenda and will pressure the World Bank into producing a report that unfairly attacks low-tax policies.
April 2, 2008
http://www.freedomandprosperity.org/ltr/ctc-wb/ctc-wb.shtml

16) The Center for Freedom and Prosperity Foundation, joined by 44 of the country's largest and most influential free-market groups, has sent a letter urging Treasury Secretary Henry Paulson to "protect America's self-interest" and oppose proposals by Senator Byron Dorgan (D-ND) and Senator Carl Levin (D-MI) that "seek to thwart tax competition and penalize good tax policy in other jurisdictions."

The letter from the Coalition for Tax Competition states, "Senator Byron Dorgan of North Dakota has proposed S. 396, a bill which targets American companies operating in selected low-tax jurisdictions and strips away their ability to postpone the imposition of a second layer of tax on their foreign-source income. Senator Carl Levin of Michigan has proposed S. 681, a bill which imposes a wide range of taxes, regulations, and penalties on American taxpayers operating in selected low-tax jurisdictions. … Both of these pieces of legislation are deeply flawed. They share a common premise that the U.S. government should adopt an adversarial position against jurisdictions with pro-growth tax policy."
March 19, 2007
http://www.freedomandprosperity.org/ltr/dorgan-levin/dorgan-levin.shtml

15) Several members of the Coalition for Tax Competition hailed Senators James Inhofe (R-OK) and Ben Nelson (D-NE) for introducing a bi-partisan bill to stop the United Nations, the OECD and other international organizations from taxing U.S. citizens and corporations or otherwise interfering with American tax policy.
July 13, 2006 -- Coalition Statement
http://www.freedomandprosperity.org/press/p07-13-06/p07-13-06.shtml

14) Several members of the Coalition for Tax Competition applauded Senator Jim DeMint's (R-SC) leadership for introducing legislation to eliminate the double taxation of Americans living and working overseas. The legislation, entitled "Working American Competitiveness Act," would enable U.S. citizens to compete for international jobs on a level playing field with citizens of other nations.
June 13, 2006 -- Coalition Statement
http://www.freedomandprosperity.org/press/p06-13-06/p06-13-06.shtml

13) The Center for Freedom and Prosperity Foundation, joined by more than 30 of the country's largest and most influential free-market groups, urged Treasury Secretary John Snow to immediately withdrawal the Internal Revenue Service (IRS) regulation "first proposed by the Clinton Administration three days before President Bush's first inauguration over five years ago." The proposed rule (Reg 133254-02) would force U.S. banks to report deposit interest paid to nonresident aliens.

The letter from the Coalition for Tax Competition stated, "This proposed rule … is an abuse of the regulatory process that seeks to overturn the law rather than to enforce it. Moreover, it will undermine our economy's performance by causing capital to flee the American banking system. This will have a negative impact on homeowners, consumers, and businesses." The letter further stated, "The regulation has met with strong disapproval from Congress since its inception. More than 150 Members of Congress, including more than 20 Senators, have come out against the regulation since 2001. Every major free-market think tank, as well as every national banking association, has expressed strong opposition."
March 22, 2006
http://www.freedomandprosperity.org/ltr/ctc-irsreg2/ctc-irsreg2.shtml

12) The Coalition for Tax Competition today sent a letter urging Joshua B. Bolten, the Director of the White House's Office of Management and Budget, to "strongly consider eliminating or at least dramatically reducing funding" to the Paris-based Organization for Economic Cooperation and Development.

In the letter sent to Director Bolten, representatives of more than 30 of the country's largest and most influential free-market groups stated, "The OECD used to focus on gathering statistics and publishing innocuous studies. Although it is doubtful that these activities were ever a particularly good use of American tax dollars, the OECD's more recent pursuit of policies that undermine America's competitiveness is deeply troubling. … The Paris-based bureaucracy has also pursued an anti-tax competition agenda that would hinder the flow of jobs and capital to the U.S. economy. …American taxpayers should not be subsidizing a bureaucracy that is actively pushing anti-market and anti-American policies."
February 9, 2006
http://www.freedomandprosperity.org/ltr/ctc-bolten/ctc-bolten.shtml

11) The Center for Freedom and Prosperity Foundation, joined by more than 40 of the country's largest and most influential free-market groups, urged Treasury Secretary John Snow to "permanently withdraw a proposed Internal Revenue Service (IRS) regulation (Reg 133254-02) that would force U.S. banks to report deposit interest paid to nonresident aliens."

In the letter sent to the Treasury Secretary, the members of the Coalition for Tax Competition stated, "This initiative is inconsistent with current law and it will undermine our economy's performance by causing capital to flee the American banking system. The regulation was misguided when issued in the final days of the Clinton Administration, and the cosmetic changes the IRS put forth in 2002 do not address the proposed regulation's fundamental shortcomings. …This regulation is bad tax policy and bad regulatory policy. It is inconsistent with President Bush's tax reform agenda and it will hurt the U.S. economy by reducing the amount of capital for workers, consumers, homeowners, and entrepreneurs." ~ March 11, 2005
http://www.freedomandprosperity.org/ltr/ctc-2005-03-11/ctc-2005-03-11.shtml

10) The Center for Freedom and Prosperity Foundation, joined by more than 30 of the country's largest and most influential free-market groups, announced opposition to U.S. subsidies for the Paris-based Organization for Economic Cooperation and Development (OECD). The organizations, which participate in a Coalition for Tax Competition, shared their views with Senator Judd Gregg of New Hampshire and Congressman Frank Wolf of Virginia. Both lawmakers serve as Chairmen of their respective Appropriations Subcommittees in charge of funding Commerce, State and Justice. Most OECD funding comes from the Department of State. ~ October 21, 2004
http://www.freedomandprosperity.org/ltr/ctc-gregg-wolf/ctc-gregg-wolf.shtml

9) The Center for Freedom and Prosperity, joined by more than 30 of the country's largest and most influential free-market groups, urged Treasury Secretary John Snow to "permanently" withdraw the proposed regulation to require the reporting of bank deposit interest paid to nonresident aliens (REG-133254-02). In the letter sent today to the Treasury Secretary, the members of the Coalition for Tax Competition stated, "This initiative is not needed to enforce US tax law and it will undermine our economy's performance by causing capital to flee the American banking system…For more than 80 years, Congress has sought to attract capital to the US economy by neither taxing nonresident alien bank deposit interest nor requiring the reporting of such income. The IRS does not have the right to unilaterally change this law, so the regulation is a clear violation of congressional intent." ~ January 26, 2004
http://www.freedomandprosperity.org/ltr/ctc6/ctc6.shtml

8) The Center for Freedom and Prosperity, joined by more than 30 of the country's largest and most influential free-market groups, praised New York Congressman John E. Sweeney for his defense of America's economic interests. Sweeney, a member of the House Appropriations Committee, has taken a lead role in opposition to tax harmonization schemes promulgated by the United Nations (UN) and the Paris-based Organization for Economic Cooperation and Development (OECD).

The letter to Rep. Sweeney from members of the Coalition for Tax Competition stated, "Recent events have demonstrated that international bureaucracies often are hostile to US interests, but this antipathy is not limited to 'foreign policy' issues. We believe the tax harmonization and global taxation plans of the OECD and UN are bad tax policy – and we also believe that American taxpayers should not subsidize their statist agendas. If these bureaucracies insist on pursuing anti-free market tax policies, they should do so without any financial assistance from the United States – particularly since poor people around the world will suffer if developing countries are discouraged from using tax policy to promote economic growth." ~ September 23, 2003
http://www.freedomandprosperity.org/ltr/sweeney/sweeney.shtml

7) The Center for Freedom and Prosperity, joined by more than 30 of the country's largest and most influential free-market groups, urged Treasury Secretary Paul O'Neill to "immediately" withdraw the proposed regulation to require the reporting of bank deposit interest paid to nonresident aliens (REG-133254-02). In the letter sent Wednesday to the Treasury Secretary, the members of the Coalition for Tax Competition stated, "This regulation is bad tax policy and bad regulatory policy. It is inconsistent with President Bush's tax reform agenda and it will hurt the U.S. economy by reducing the amount of capital for workers, consumers, homeowners, and entrepreneurs." ~ November 13, 2002
http://www.freedomandprosperity.org/ltr/ctc5/ctc5.shtml

6) The Center for Freedom and Prosperity, joined by more than 30 of the country's largest and most influential free-market groups, applauded Rep. Bill Thomas, Chairman of the House Ways and Means Committee, for trying to fix the provisions of the tax code that make it difficult for U.S.-based companies to compete in international markets. In a letter sent to the Chairman today, the members of the Coalition for Tax Competition also urged Chairman Thomas to reconsider two of the major provisions in his bill (H.R. 5095) to simplify international taxes -- the punitive inversion moratorium and the tax increase on foreign-based companies that invest in the U.S. economy.
http://www.freedomandprosperity.org/ltr/ctc4/ctc4.shtml

5) More than 20 of the country's largest and most influential free-market groups urged the chairmen and ranking members of the House and Senate tax writing committees to reject fiscal protectionism and instead reform the internal revenue tax code so that American companies would not have a reason to relocate overseas.
http://www.freedomandprosperity.org/ltr/ctc3/ctc3.shtml

4) More than 20 of the country's largest and most influential free-market groups asked Treasury Secretary Paul O'Neill to support a territorial tax system for corporate income. Based on the common sense notion that governments should tax only the income earned inside their borders, a territorial tax system for corporate income would dramatically boost the competitiveness of U.S. companies while fulfilling international trade obligations.
http://www.freedomandprosperity.org/ltr/ctc2/ctc2.shtml

3) Letter from 27 of the Country's Most Prestigious Free Market Groups Urging the Bush Administration to Oppose the Clinton-Era IRS Bank Deposit Interest Regulation – December 19, 2001:
http://www.freedomandprosperity.org/ltr/daniels/daniels.shtml

2) CF&P and the Coalition for Tax Competition advocate pulling IRS regulation on the reporting of bank deposit interest paid to nonresident aliens in a letter to the Senate – November 1, 2001
http://www.freedomandprosperity.org/ltr/senate11-01/senate11-01.shtml

1) More than twenty-five prominent free-market leaders and supporters of individual liberty sent a letter to President George W. Bush to express concerns that proposed money laundering legislation will undermine international cooperation in the fight against crime. The letter pointed out that threats of financial protectionism will create animosity and instead advocated that the United States expand its network of mutual legal assistance treaties. Link to letter below:
http://www.freedomandprosperity.org/ltr/president1/president1.shtml

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