Center for Freedom and Prosperity Foundation
For Immediate Release
Tuesday, March 20, 2007
Coalition for Tax Competition Urges Treasury to Reject Senate Proposals that Penalize Americans Who Invest in Nations with Competitive Tax Regimes
(Washington, DC, Tuesday, March 20, 2007) – 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."
The letter details three flaws with the two proposals.
- Both bills will undermine American competitiveness
- Both bills create discriminatory blacklists
- Both bills violate America's WTO trade obligations
"Senators Dorgan and Levin should be ashamed for their discriminatory attacks on less economically developed countries. American lawmakers should encourage more nations in the developing
world to adopt pro-growth tax regimes, not penalize them," stated Andrew F. Quinlan of the Center for Freedom and Prosperity Foundation
The 45 signers of the letter encourage Secretary Paulson and others to reform he United States' tax code so it is more competitive rather than penalize Americans for investing in developing nations with competitive tax systems.
Additional comments on the Dorgan and Levin proposals:
Dan Mitchell of the Cato Institute: "Senators Dorgan and Levin
have managed to combine the worst of all worlds. Their bills hurt U.S. competitiveness, discriminate against developing nations, and violate America's WTO obligations."
Veronique de Rugy of the American Enterprise Institute: "Rather than blacklisting nations with better tax law, Senators Dorgan and Levin should work to make America's tax system more competitive – even if it means giving up some of their power to redistribute money to favored interest groups."
Grover Norquist of Americans for Tax Reform: "Instead of behaving like French politicians and trying to blacklist nations with better tax policy, Senators Dorgan and Levin should lower tax rates to encourage more jobs and investment in America."
John Berthoud of theNational Taxpayers Union: "American jobs will be lost and exports hurt if Senators Dorgan and Levin succeed in making it harder for American companies to compete in global markets."
Representatives of the following organization signed the Coalition letter:
Center for Freedom and Prosperity Foundation; American Enterprise Institute; Americans for Tax Reform; National Taxpayers Union; U.S. Chamber of Commerce; FreedomWorks; Club for Growth;
Competitive Enterprise Institute; Small Business & Entrepreneurship Council; Council for Citizens Against Government Waste; The Heritage Foundation; American Conservative Union; 60 Plus Association; Alabama
Policy Institute; Alliance for Worker Freedom; American Legislative Exchange Council; American Shareholders Association; Americans for Prosperity; Americans for the Preservation of Liberty; Arizona Free
Enterprise Club; Capital Research Center; Center for Individual Freedom; Citizen Outreach Project; Citizens for Limited Taxation (MA); Coalition to Protect Free Markets; The Free Enterprise Fund; Independent
Women's Forum; Institute for Liberty; Institute for Policy Innovation; Institute for Research on the Economics of Taxation; Iowa Wednesday Group; James Madison Institute; Let Freedom Ring; Maryland Taxpayers
Association; National Center for Public Policy Research; National Tax Limitation Committee; The Nevada Policy Research Institute; New York Tax Reform Organization; Oregon Taxpayers United; Pacific Research
Institute; Sovereign Society; Taxpayers League of Minnesota; United Californians for Tax Reform; United Seniors Association; and, Virginia Institute for Public Policy.
Link to the full text of the Coalition for Tax Competition Letter:
PDF Version of Coalition Letter:
Text of Letter and List of Signers…
March 19, 2007
The Honorable Henry M. Paulson, Jr.
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
Dear Secretary Paulson,
We are writing to express our concern about two Senate proposals that would undermine American competitiveness, discriminate against developing nations, and compromise the U.S. commitment
to free trade in financial services.
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. Specific flaws include:
- Both bills will undermine American competitiveness. Only U.S. taxpayers seeking to operate in low-tax jurisdictions will be penalized by these proposals. Foreign taxpayers will be able to benefit
from good tax policy in these jurisdictions, while American taxpayers will suffer a competitive disadvantage. The United States will lose market share, causing a drop in jobs and exports.
- Both bills create discriminatory blacklists. Senator Dorgan's legislation singles out 40 jurisdictions for discriminatory treatment, while Senator Levin's bill targets 34 nations and territories.
Exactly 75 percent of the jurisdictions blacklisted in S. 396 and more than 75 percent of the jurisdictions blacklisted in S. 681 are in the developing world. Neither bill targets wealthy nations such as the
Netherlands, Belgium, Austria, and the United Kingdom, even though they all have "tax haven" policies, and Senator Dorgan's bill omits Luxembourg and Switzerland.
- Both bills violate America's trade obligations. The United States wisely supports free trade in services, a policy which unambiguously promotes the national interest. Unfortunately, S. 396 and S.
681 both would impose protectionist barriers and almost surely put America in violation of its World Trade Organization obligations. Equally worrisome, the proposals would invite other nations to target the
United States, particularly since America's own "tax haven" policies for foreign investors have helped attract more than $10 trillion to the U.S. economy.
We urge you to protect America's self-interest and oppose proposals that seek to thwart tax competition and penalize good tax policy in other jurisdictions. The United States is not a
decrepit, high-tax European welfare state, yet this legislation is akin to the noxious tax harmonization schemes concocted in various European nations.
If some lawmakers are concerned that American taxpayers are shifting economic activity to low-tax jurisdictions because of better tax law, they should respond by fixing some of the laws in
the internal revenue code, many of which were identified by the President's Advisory Panel on Tax Reform.
We look forward to working with you and hope that you will resist anti-competitive, discriminatory, and protectionist proposals that are contrary to good economic policy.
Andrew F. Quinlan ~ President, Center for Freedom and Prosperity Foundation
Veonique de Rugy ~ Resident Fellow, American Enterprise Institute
Grover Norquist ~ President, Americans for Tax Reform
John Berthoud ~ President, National Taxpayers Union
Ashley Miller ~ Director of Cong. and Public Affairs, U.S. Chamber of Commerce
Matt Kibbe ~ President, FreedomWorks
Pat Toomey ~ President, Club for Growth
Fred L. Smith Jr. ~ President, Competitive Enterprise Institute
Karen Kerrigan ~ President & CEO, Small Business & Entrepreneurship Council
Thomas Schatz ~ President, Council for Citizens Against Government Waste
Tim Kane ~ Director, Ctr. for Int'l Trade and Economics, The Heritage Foundation
David A. Keene ~ Chairman, American Conservative Union
James L. Martin ~ President, 60 Plus Association
Gary Palmer ~ President, Alabama Policy Institute
Ryan Ellis ~ Executive Director, Alliance for Worker Freedom
Lori Roman ~ Executive Director, American Legislative Exchange Council
Daniel Clifton ~ Executive Director, American Shareholders Association
Tim Phillips ~ President, Americans for Prosperity
Mark Chmura ~ Executive Director, Americans for the Preservation of Liberty
Steve Voeller ~ President, Arizona Free Enterprise Club
Terrence Scanlon ~ President, Capital Research Center
Jeffrey Mazzella ~ President, Center for Individual Freedom
Chuck Muth ~ President, Citizen Outreach Project
Chip Faulkner ~ Associate Director, Citizens for Limited Taxation (MA)
Stephen Manfredi ~ Communications Director, Coalition to Protect Free Markets
Mallory Factor ~ Chairman, The Free Enterprise Fund
Michelle D. Bernard ~ President and CEO, Independent Women's Forum
Kerri Houston ~ Senior Fellow, Institute for Liberty
Tom Giovanetti ~ President, Institute for Policy Innovation
Stephen J. Entin ~ President, Institute for Research on the Economics of Taxation
Dr. Don Racheter ~ Moderator, Iowa Wednesday Group
J. Robert McClure, III ~ President and CEO, James Madison Institute
Colin A. Hanna ~ President, Let Freedom Ring
Richard Falknor ~ Executive Vice-President, Maryland Taxpayers Association
Amy Ridenour ~ President, National Center for Public Policy Research
Lewis K. Uhler ~ President, National Tax Limitation Committee
Sharon J. Rossie ~ President, The Nevada Policy Research Institute
Fred Lane ~ Chairman, New York Tax Reform Organization
Bill Sizemore ~ Executive Director, Oregon Taxpayers United
Sally C. Pipes ~ President and CEO, Pacific Research Institute
Bob Bauman ~ Legal Counsel, Sovereign Society
David M Strom ~ President, Taxpayers League of Minnesota
Roland Boucher ~ Chairman, United Californians for Tax Reform
Charles W. Jarvis ~ Chairman, United Seniors Association
Joh Taylor ~ President, Virginia Institute for Public Policy
Andrew Quinlan can be reached at 202-285-0244, firstname.lastname@example.org
Dan Mitchell can be reached at 202-218-4615, email@example.com
Veronique de Rugy can be reached at 202-862-7165, VdeRugy@aei.org
Grover Norquist can be reached at 202-785-0266, firstname.lastname@example.org
John Berthoud can be reached at 703-683-5700, email@example.com
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