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CFP Weekly Update, January 22, 2002

Center For Freedom and Prosperity's Weekly Update

1) Washington Update

2) Rep. Phil Crane Asks 6 Critical Questions of Treasury Secretary Paul O'Neill

3) Turning Lemons into Lemonade: WTO Ruling Creates Golden Opportunity for Adoption of Territorial Tax System

4) Center for Freedom and Prosperity exposes UN's Tax Grab

5) CFP Foundation Study Finds That U.S. Government Agencies Confirm That Low-Tax Jurisdictions Are Not Money Laundering Havens

6) CFP Seeks Formal Withdrawal of Clinton-Era IRS Regulation: One-Year Old Proposal Would Undermine U.S. Banks, Drive Capital From America

 

1) Washington Update

We have completed more than six dozen meetings on Capitol Hill in the last two weeks, with many more scheduled. In addition, we have more meetings scheduled with the Bush Administration.

In this week's update, we highlight the important letter Rep. Phil Crane, a leader on Congress' tax writing committee, sent to Treasury Secretary Paul O'Neill.  We also discuss the great opportunity to make lemonade out of lemons after the World Trade Organization rules that America's treatment of export income is an "unfair trade subsidy."  Our foundation's report on the "real" money laundering centers has been very well received, and our fight to have the IRS interest reporting regulation officially withdrawn is bearing fruit.  Last but not least, the UN's entry in to the debate on tax harmonization is generating substantial negative press thanks to the efforts of the Center and our allies.

Don't forget to keep up-to-date by visiting our web page over the next few weeks for any breaking news on the tax harmonization and anti-tax competition front (www.freedomandprosperity.org).

 

2) Rep. Phil Crane Asks 6 Critical Questions of Treasury Secretary Paul O'Neill

Senior Ways and Means Member, Rep. Phil Crane Asks Treasury Secretary Paul O'Neill 6 Important Questions on Tax Competition and its Effect on the U.S.  Full letter linked below.

Snap shot of the six questions:

1. Has the Treasury Department conducted any estimate of how much foreign investment would be withdrawn from America if we became an informer for other governments' tax authorities?

2. Has Treasury ascertained whether the OECD's anti-tax competition policies would violate international trade agreements?

3. Can Treasury assure us that the OECD and EU proposals would not hinder efforts to reform the U.S. tax system? More specifically, can the Treasury Department guarantee that we would not feel compelled to collect any data for foreign tax collectors that we do not need to collect for U.S. tax purposes?

4. Has Treasury estimated whether state governments would be compelled to change their laws?

5. Has the Treasury Department assessed the human rights and personal safety implications of the OECD and EU initiatives? Do you think that it is realistic to believe that this information will be safe from corrupt bureaucrats, sophisticated hackers, and oppressive governments?

6. Has Treasury estimated the economic impact the OECD and EU schemes would have on our friends and allies in the Caribbean? If not, could you provide an estimate of the increased crime and illegal immigration that will result?

Crane letter:
http://www.freedomandprosperity.org/ltr/crane/crane.shtml

Crane letter (PDF version):
http://www.freedomandprosperity.org/ltr/crane/crane.pdf

Press Clips:

January 11, 2002, Bureau of National Affairs, by Myrna Zelaya-Quesada, Crane Questions Treasury's Support Of Information Exchange Agreements
http://www.freedomandprosperity.org/Articles/bna01-11-02/bna01-11-02.shtml

January 11, 2002, Tax-News.com, by Mike Godfrey, US Congressman Tests Treasury On Tax Competition
http://www.tax-news.com/asp/story/story.asp?storyname=6955

 

3) Turning Lemons into Lemonade: WTO Ruling Creates Golden Opportunity for Adoption of Territorial Tax System

From CFP's Strategic Memo (Jan. 21): "Last week, the World Trade Organization sided with the European Union and ruled that a section of U.S. tax law is an unfair trade subsidy. According to the Geneva-based institution, America's treatment of corporate income from exports (as governed by ETI the Extraterritorial Income Exclusion Act) violates trade rules.

"In many ways, this is a troubling decision. Most importantly, a dangerous precedent has been established. What happens, for instance, when the French argue that America's low tax rates are an export subsidy? As the Wall Street Journal stated on January 17, "Once tax policy is on the table, there's no end to what the WTO might meddle in. Which may be exactly what some Europeans want. Saddled with their own anti-competitive, high-tax regimes, they'd love to use the global trade bureaucracy to force Britain, the U.S. and other lower-tax countries to become just as uncompetitive. This is an offer the U.S. can refuse."

"The decision also reeks of hypocrisy and double standards. The WTO has decided that America cannot choose how to tax certain types of income, but European governments are allowed to rebate the value-added tax (which can reach 25 percent) on exported goods.

"In the final analysis, however, the WTO decision is good news. Why? Because the WTO has given U.S. policy makers a reason to junk worldwide taxation of corporate income and instead implement a territorial tax system. A territorial system is based on the common-sense notion that a government should impose tax only on income earned inside its borders, which is in stark contrast to a worldwide system that imposes tax on income earned in other jurisdictions. Territorial taxation is good tax policy for several reasons:"  Link to full Strategic Memo below:

CFP Strategic Memorandum, January 21, 2002:
http://www.freedomandprosperity.org/memos/m01-21-02/m01-21-02.shtml

CFP Press Statement, January 14, 2002:
http://www.freedomandprosperity.org/press/p01-14-02/p01-14-02.shtml

Select Press Clips:

January 17, 2002, The Wall Street Journal, Review & Outlook: Pandora's Trade War
http://www.freedomandprosperity.org/Articles/wsj01-17-02/wsj01-17-02.shtml

January 15,  2002, Bureau of National Affairs, By Myrna Zelaya-Quesada and Gary G. Yerkey, U.S. Resolved to Comply With WTO, Protect Multinational Corporations
http://www.freedomandprosperity.org/Articles/bna01-15-02/bna01-15-02.shtml

 

4) Center for Freedom and Prosperity exposes UN's Tax Grab

Dan Mitchell appeared on the Laura Ingraham radio show and the Ollie North radio show, both nationally syndicated, to condemn the UN for siding with Europe's welfare states and scheming to impose tax harmonization. Veronique de Rugy of the Cato Institute also appeared on a number of radio shows, including CROSSTALK Radio Talk Show in Milwaukee, WABC-AM's "John and Paul Show" from New York City, KPFA-FM in Berkley, CA and two in Seattle, WA, KVI and KUOW, a National Public Radio station.

Ollie North bashed the UN tax agenda in his nationally syndicated newspaper column.  Link below:

January 18, 2002, by Oliver North, The global tax man cometh
http://www.townhall.com/columnists/ollienorth/on20020118.shtml

Fox News also covered the UN agenda, giving the issue much-needed attention.

[Excerpt from Fox News article linked below]
NEW YORK The United Nations is gearing up for what could be yet another explosively controversial international conference, this time over charges the organization wants to create a powerful worldwide tax bureaucracy.

"This is scary. They're talking about establishing an extra layer of government at the world level," said Veronique de Rugy, an analyst at the Washington-based Cato Institute. "Their goal is an international tax cartel that would work to keep taxes high."

The controversy centers in part around a proposal to create something called the International Tax Organization. The organization would help nations collect and disseminate information on tax policies and, opponents insist, assess its own taxes, help governments tax emigrant citizens working in other countries and even compel member states to share tax data. Full article linked below:

January 18, 2002, Fox News, By Refet Kaplan, Critics Slam Proposed U.N. Tax Authority
http://www.foxnews.com/story/0,2933,42529,00.html

Link to CFP Foundation's report on the UN's Tax Agenda
http://www.freedomandprosperity.org/press/p08-02-01/p08-02-01.shtml

CFP's UN Tax Agenda Page:
http://www.freedomandprosperity.org/2001/un/un.shtml

 

5) CFP Foundation Study Finds That U.S. Government Agencies Confirm That Low-Tax Jurisdictions Are Not Money Laundering Havens

Washington (January 15, 2001) -- The Center for Freedom and Prosperity Foundation today released a study, based on government data, demonstrating that there is no link between so-called tax havens and money laundering.  Andrew Quinlan, President of the Center, remarked, "This new study uses State Department, CIA, IRS and FATF findings to show conclusively that countries with low tax burdens and financial privacy are not any more likely to be money laundering centers than high-tax countries. In fact, it shows the opposite. Dirty money is more likely to be laundered in high-tax countries because that is where the illegal activity is most likely to occur."

The report, entitled "U.S. Government Agencies Confirm That Low-Tax Jurisdictions Are Not Money Laundering Havens," is written by Heritage Foundation tax expert Daniel J. Mitchell.  Link to full statement and study below:

Press Release:
http://www.freedomandprosperity.org/press/p01-15-02/p01-15-02.shtml

CFP Foundation Study:
http://www.freedomandprosperity.org/Papers/blacklist/blacklist.shtml

PDF Version of CFP Foundation Study:
http://www.freedomandprosperity.org/Papers/blacklist/Blacklist.pdf

Press Clips:

January 16, 2002, Bureau of National Affairs, by Myrna Zelaya-Quesada, CFP Study Indicates Laundering Prevalent in High-Tax Countries
http://www.freedomandprosperity.org/Articles/bna01-16-02/bna01-16-02.shtml

January 16, 2002, Tax-News.com, Report Shows Tax Havens Not Prominent In Money-Laundering,
http://www.tax-news.com/asp/story/story.asp?storyname=6996

 

6) CFP Seeks Formal Withdrawal of Clinton-Era IRS Regulation: One-Year Old Proposal Would Undermine U.S. Banks, Drive Capital From America

Washington (January 17, 2002) One year ago today, the Internal Revenue Service (IRS) proposed a regulation to require the reporting of bank deposit interest paid to nonresident aliens.

"Three days before he left office, President Clinton's IRS proposed a regulation that would chase hundreds of billions of dollars out of the U.S. economy. The good news is that President Bush halted the regulation, but the President still needs to formally withdraw the regulation to eliminate uncertainty and help American banks compete," said Andrew Quinlan, President of the Center for Freedom and Prosperity.

This proposal (REG 126100-00) would force U.S. banks to inform the IRS about any bank deposit interest paid to people from other countries. The IRS then would pass that information to the other countries' tax authorities so that they could impose tax on the interest paid to those accounts even though the income was earned in America.  Link to full statement below:
http://www.freedomandprosperity.org/press/p01-17-02/p01-17-02.shtml

CFP's Dump the IRS Reg Page:
http://www.freedomandprosperity.org/update/irsreg/irsreg.shtml

Press clip:

January 21, 2002, Tax-News.com, Washington Group Presses IRS To Abandon Non-Resident Interest Plan
http://www.tax-news.com/asp/story/story.asp?storyname=7038

January 15, 2002, Tax-News.com, CFP Mounts Meetings Blitz In Washington, by Mike Godfrey
http://www.tax-news.com/asp/story/story.asp?storyname=6983

 

Best regards,

Andrew Quinlan
Center for Freedom and Prosperity
President
202-285-0244
208-728-9639 (efax)
quinlan@freedomandprosperity.org
www.freedomandprosperity.org

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