For Immediate Release
Wednesday, July 18, 2001
Committee Hearing Stacked . . . Majority
Not Confident of Their Position
Unfortunately, the Permanent Subcommittee on Investigations decided to stack the hearing on so-called tax havens. There are many important questions that need to be
asked and answered today, but the failure to invite both sides is a sign that the Majority is not confident of their position. Groups like the Center for Freedom and Prosperity, the Heritage Foundation, and others
would have welcomed the chance to testify. Because of that omission, a short statement is printed below, one that hopefully will be included in the record.
Statement by Andrew F. Quinlan, President of the Center for Freedom and Prosperity.
Tax competition is a liberalizing force, one that compels governments to be more responsible. Tax competition among nations, like competition between
businesses, promotes efficiencies and keeps costs down. This is good for the economy and it controls the growth of government. But this is why special interest groups and their allies in government
so desperately want tax harmonization. But whether they want explicit tax harmonization or implicit tax harmonization through information exchange, governments should not conspire against taxpayers. And
multinational bureaucracies like the Organization for Economic Cooperation and Development, the European Union, and the United Nations should cease their attacks on low-tax nations.
The Center for Freedom and Prosperity believes that there are two ways to deal with tax evasion.
One approach is to pass ever more intrusive laws that force information exchange and trample the privacy and human rights of individuals. The second choice is to reform our current tax code. A territorial tax system – where nations only tax the income earned inside their borders, combined with the elimination of the double-taxation of income that is saved and invested, would wipe out the incentive to hide economic activity. For what it's worth, it also is good tax policy.
Money laundering is often used as a club to attack low-tax nations. This is hypocritical and inaccurate. Most criminal proceeds are obtained and laundered in OECD nations. In
any event, countries should cooperate in the fight against international crime, but this should be pursued in a sensible fashion.
A large number of proposals to crack down on money laundering infringe on civil liberties and the right to due process. There has to be a better way. The Justice Department's most recent data states that fewer than 1/1000th of one percent of currency transaction reports are used in a criminal conviction. But the cost to the economy in collecting this data is staggering. Reports like this, and the attack on our individual freedoms, is why Treasury Secretary O'Neill has asked for a review of our current procedures. I applaud him for this move.
In order to share our views with Treasury on information exchange and money laundering, I have agreed to become a member of the Task Force on Information Exchange and Financial Privacy. I believe that unlimited information exchange, which is being advocated by the Organization for Economic Cooperation and Development, the European Union, and the United Nations, is a threat to the rule of law and human rights. This new task force will work with government policy makers and law enforcement officials to ensure that civil liberties are protected. I am particularly interested in working to protect America's long-term interests, which would be undermined by any agreement that compelled nations to put the laws of other countries above their own."
The U.S. is the world-leading beneficiary of tax competition.
We have more that $8 trillion in foreign investment in this country. We need to enact laws that protect our market share of the world's capital investment in the U.S. These are the questions that need to be addressed and that is why the Center for Freedom and Prosperity has been so active on this issue.