For Immediate Release
Monday, January 14, 2002
Turning Lemons into Lemonade: WTO
Ruling Creates Golden Opportunity for
Adoption of Territorial Tax System
Washington (January 14, 2001) – As expected, the World Trade Organization once again decided that America's tax treatment of income earned from exports is an "unfair trade subsidy." Free
market leaders were not surprised by the decision, and stated that this dark cloud may have a big silver lining.
Andrew Quinlan, President of the Center for Freedom and Prosperity, remarked, "The U.S. should scrap the worldwide tax system we have for corporate income and move to a territorial tax system.
Territorial taxation is WTO-compliant and many EU countries already use this approach.
For the last few weeks, in anticipation of the WTO's ruling, the Center for Freedom and Prosperity has been on Capitol Hill, briefing Congressional offices on the need to scrap our current worldwide corporate tax system for a territorial system. We should take this setback and turn it into victory for American businesses and taxpayers."
Daniel Mitchell of the Heritage Foundation, commented, "There are three possible responses to the WTO decision. First, America can eliminate the portion of our tax law that has the EU upset, but that
would be a $4 billion annual tax increase on America's export-oriented companies. Second, we can ignore the WTO decision and keep out tax law intact, but that means the EU would be able to impose $4 billion of
compensatory tariffs against U.S. products. Both of these options are unpalatable, which is why the only good response to the WTO is tax reform – replacing our anti-competitive system of worldwide taxation with a
simple and fair territorial tax system."
Veronique de Rugy, Cato Institute policy analyst added, "Hopefully the WTO ruling will give the right incentive to the Bush administration to switch from a worldwide tax system to
territorial taxation. Territorial taxation is not only good trade policy but it is also good tax policy and it will increase substantially the competitiveness of U.S. firms."
The Center for Freedom and Prosperity is an Alexandria, Virginia-based, 501(c)(4) nonprofit, nonpartisan organization that lobbies Congress and the Administration on tax competition,
financial privacy and fiscal sovereignty.
For additional comments:
Andrew Quinlan can be reached at 202-285-0244
Dan Mitchell can be reached at 202-608-6224
Veronique de Rugy can be reached at 202-842-0200