Center for Freedom and Prosperity Foundation

For Immediate Release
Wednesday, October 22, 2003
202-285-0244
www.freedomandprosperity.org

Foundation Study Documents OECD's Failure:
Bureaucracy's Anti-Tax Competition Project Floundering

October 22, 2003 (Washington, DC) – Today, the Center for Freedom and Prosperity Foundation released a study documenting the absence of a level playing field between OECD and Non-OECD countries when it comes to divulging private financial data to foreign tax collectors. The study concludes that this represents a major setback for the Paris-based bureaucracy's anti-tax competition project and explains why this is a positive development. According to the study, "low-tax regimes must aggressively defend tax competition as a liberalizing force in the world economy" since "even OECD economists have widely written that lower tax rates and neutral treatment of capital are important contributors to economic growth."

"Today's study is an expansion and update of a Strategic Memorandum we released before the Organization for Economic Cooperation and Development's (OECD) Global Tax Forum held last week in Ottawa," said Andrew Quinlan, president of the CF&P Foundation. "The study sets the record straight once and for all that there is not a level playing field for the exchange of tax information between jurisdictions – and also explains that a level playing field based on bad tax policy would be deleterious to global economic growth."

CF&P Foundation's latest Prosperitas entitled, "The Level Playing Field: Misguided and Non-Existent," was written by Heritage Foundation Senior Fellow Dan Mitchell.  Commenting on his study, Mitchell stated, "The OECD agenda of double-taxing capital and extra-territorial taxation is completely inconsistent with good tax policy, but the Paris-based bureaucracy is willing to undermine global economic growth to prop up the welfare states of member nations."

"The OECD's tax harmonization agenda has failed again and this is good news for the global economy. Unfortunately, the OECD is like a Terminator, relentlessly focused on its destructive mission. But on the upside, CF&P and the Coalition for Tax Competition will be there to defend and preserve tax competition, financial privacy and fiscal sovereignty," concluded Quinlan."

Link to full paper:
http://www.freedomandprosperity.org/Papers/lpf/lpf.shtml

Executive Summary of Study:
For all intents and purposes, the Organization for Economic Cooperation and Development's attempt to undermine tax competition has collapsed.  Many low-tax jurisdictions had made "commitments" to weaken their attractive tax and privacy laws after being threatened by the OECD with financial protectionism  - but explicitly stated that those commitments were binding only if all OECD nations agreed to the same flawed rules (the famous "level playing field" requirement). The European Union's Savings Tax Directive might have satisfied that condition, but that tax harmonization scheme collapsed when the United States, the United Kingdom, Switzerland, and Luxembourg refused to agree to share confidential information about nonresident investors with foreign tax authorities. This is a positive development for the world economy. Tax competition is a liberalizing force in the world economy. Fiscal rivalry helps lower tax rates and helps reduce discriminatory taxes on income that is saved and invested, and even OECD economists have widely written that lower tax rates and neutral treatment of capital are important contributors to economic growth.

For additional comments:
Andrew Quinlan can be reached at 202-285-0244, quinlan@freedomandprosperity.org
Dan Mitchell can be reached at 202-608-6224, dan.mitchell@heritage.org

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Center for Freedom and Prosperity
P.O. Box 10882
Alexandria, Virginia 22310
Phone: 202-285-0244
www.freedomandprosperity.org
cfp@freedomandprosperity.org

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