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Freedom and Prosperity
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CF&P E-Mail Update,  February 23, 2004

Center for Freedom and Prosperity's E-mail Update

1) Washington Update

2) The Market Center Blog

3) Georgia Congressman Charlie Norwood Asks for Immediate - and Permanent - Withdrawal of Misguided IRS Interest Reporting Rule

4) Great Primer on Why the IRS's Bank Deposit Interest Reporting Rule is Bad for America

5) OECD Fails Again

6) Selected Blog Entries

7) EU Savings Tax Directive Stalls … Again

8) Richard Rahn:  The Cayman Islands are a role model in world finance

9) Robert J. Samuelson: The European Predicament

10) Weekly Standard: Europe's Wishful Thinking

11) Tax Competition Works: Austria Forced To Cut Business Tax

12) Germany Expresses Opposition to EU Tax Plans

13) Mark Hunter: Something Is Rotten In the State of France

14) How corrupt is France?

15) Jerry Z. Muller: The Morality of the Market

16) Peter Clarke: Taxing problem has an answer

17) French Parliamentary Report Suggests Worldwide Taxes to Counter Globalization

18) Tech Central Station:  Supply-Side Swiss

19) CF&P Clips

 

1) Washington Update

I'm happy to announce that the Center has started a new blog.  What is a blog? It is Internet slang for a web page that is updated on a regular basis. The Market Center Blog was launched two weeks ago, and is a forum to discuss and highlight events that will effect the global fight for economic freedom and prosperity. We created the blog because many of our readers wanted to receive information on a more frequent basis. But we also know that many of you are perfectly content receiving an update every couple of weeks and might not welcome additional emails. The blog is a way of providing frequent commentary and information on key economic issues, and should be quite useful for people who closely monitor tax competition issues.

I'm pleased to report that the blog has received thousands of hits and we have received some rave reviews from Capitol Hill, across America, and a few from overseas. Readers are invited to submit questions, though we cannot promise public responses to every query. Links to our blog and its archives are below.

Best regards, AQ

 

2) The Market Center Blog

To briefly reiterate, the Center for Freedom and Prosperity has started The Market Center Blog, which will serve as a platform for periodic observations about economic policy, philosophy, government, and the political process. Some of the commentary will relate to tax competition issues, but this site is designed to allow a wide range of topics to be analyzed.

The CF&P blog will feature input from several economic experts, including Dan Mitchell of the Heritage Foundation, Veronique de Rugy of the Cato Institute, Richard Rahn of the Institute for Global Economic Growth, and yours truly.

I welcome your thoughts and suggestions as we develop this new tool to promote and defend freedom and prosperity.

Link to The Market Center Blog:
http://www.freedomandprosperity.org/blog/blog.shtml

 

3) Georgia Congressman Charlie Norwood Asks for Immediate - and Permanent - Withdrawal of Misguided IRS Interest Reporting Rule

Rep. Norwood wrote:

"This regulation is particularly misguided since there is no need for the IRS to collect this information. For more than 80 years, Congress deliberately has chosen not to tax nonresident bank accounts and not to require reporting of this information. The proposed regulation is therefore not only unnecessary, it actually is a clear violation of congressional intent. The IRS also has chose to flout the law requiring a cost/benefit analysis of regulations that could have a significant impact on the economy." [Link to full letter below]:

Rep. Charlie Norwood's letter:
http://www.freedomandprosperity.org/ltr/norwood-irs/norwood-irs.shtml

 

4) Great Primer on Why the IRS's Bank Deposit Interest Reporting Rule is Bad for America

The Heritage Foundation has created a special webpage explaining why the IRS's proposed regulation should be withdrawn and why it will harm the U.S. economy if it is ever implemented. [see Dan's brief linked below:]

February 3, 2004, The Heritage Foundation, by Dan Mitchell, Regulation In Brief: Bank Deposit Interest Reporting Requirements

http://www.heritage.org/Research/Regulation/regulation_brief020304.cfm

 

5) OECD Fails Again

The OECD held a meeting in London earlier this month to convince low-tax jurisdictions that there is a level playing field between them and OECD in taxing and reporting of extraterritorial income. Once again, the Paris-based bureaucracy failed to convince the low-tax jurisdictions to give up their sovereignty to European tax collectors. Dan Mitchell was a featured speaker at a seminar that CF&P helped to arrange. The following is a link to CF&P's Strategic Memorandum written by Dan Mitchell on the eve of the OECD's London meeting. After the meeting concluded, Sir Ronald Sanders of Antigua put together an analysis of the OECD's "terms of reference." His analysis also is attached.

Strategic Memo:
http://www.freedomandprosperity.org/memos/m02-02-04/m02-02-04.shtml

Sir Ronald Sanders' analysis:
http://www.freedomandprosperity.org/antiguarevision.pdf

Articles:

February 3, 2004, LawAndTax-News.com, by Robin Pilgrim, Heritage Foundation Fellow Speaks On OECD London Meeting
http://www.tax-news.com/asp/story/story.asp?storyname=14937

January 30, 2004, SwissInfo, OECD tells Swiss to speed up reforms
http://www.swissinfo.org/sen/swissinfo.html?siteSect=105&sid=4678310

January 28, 2004, SwissInfo, OECD defuses tax row with Switzerland
http://www.swissinfo.org/sen/Swissinfo.html?siteSect=111&sid=4673108

 

6) Selected Blog Entries

Tax Harmonization

February 20, 2004, The non-existent level playing field.
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#205

February 19, 2004, Miracles do happen.
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#194

February 18, 2004, Hypocrisy at the OECD.
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#186

February 10, 2004, Who are the Real Tax Havens?
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#104

February 9, 2004, The OECD and EU get most of the attention, but they are not the only international bureaucracies seeking to hinder tax competition.
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#92

European Union

February 21, 2004, Is a smaller EU better than a large one?
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#212

February 20, 2004, The EU wants to subsidize corruption and economic decline in poor nations
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#203

February 20, 2004, EU tries more blackmail against Switzerland
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#206

February 20, 2004, No wonder the left hates Berlusconi
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#207

February 18, 2004, Two cheers for Switzerland and one cheer for stubborn EU politicians
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#184

February 14, 2004, EU: Taxes Yes, Accountability No
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#142

February 13, 2004, Will the Swiss save Europe?
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#132

February 11, 2004, More good news on the EU savings tax cartel
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#112

February 11, 2004, More bad news for the EU savings tax directive
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#111

February 10, 2004, EU Savings Tax Directive Death Watch
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#102

Taxation

February 18, 2004, John Kerry, tax haven profiteer, Part II.
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#183

February 17, 2004, Physician, heal thyself.
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#175

February 15, 2004, So-called tax havens are not responsible for Enron and Parmalat scandals.
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#152

February 12, 2004, Is Senator John Kerry a tax haven profiteer?
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#121

Trade and Investment

February 22, 2004, Trade creates jobs.
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#223

February 17, 2004, U.S. financial institutions attract record levels of foreign capital.
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#174

February 10, 2004, Tax havens are among the world's leaders in fighting against dirty money.
http://www.freedomandprosperity.org/blog/2004-02/2004-02.shtml#103

 

7) EU Savings Tax Directive Stalls … Again

As we've been monitoring on the blog, the proposed EU savings tax cartel is in deep trouble. It is a foregone conclusion that the conditions won't be met that are needed for the scheme to go into effect, though the EU nonetheless may vote in June to move forward with the cartel. Europe's loss will be America's gain … and Singapore's gain…and Hong Kong's gain…and Panama's gain…etc, etc.

Other EU Savings Tax Directive articles:

February 18, 2004, SwissInfo, EU hits Switzerland with new tax
http://www.swissinfo.org/sen/swissinfo.html?siteSect=105&sid=4728896

February 13, 2004, EUpolitix.com, by Anna McLauchlin, EU delays Swiss Schengen talks
http://www.eupolitix.com/EN/News/200402/823b34ff-516d-4257-8b7e-8d201a6fe740.htm

February 12, 2004, Tax-News.com, by Ulrika Lomas, Switzerland Holds Out Against EU Pressure Over Savings Tax Directive
http://www.tax-news.com/asp/story/story.asp?storyname=15056

February 11, 2004, Caribbean Net News, Conflicting reports over Cayman Islands commitment to EU Tax Directive
http://www.caribbeannetnews.com/2004/02/11/directive.htm

February 10, 2004, Financial Times, By Daniel Dombey And George Parker, Savings tax plans likely to cause EU quarrel
http://www.freedomandprosperity.org/Articles/ft02-10-04/ft02-10-04.shtml

February 10, 2004, EUpolitix.com, by Anna McLauchlin, Tax talks trouble finance ministers
http://www.eupolitix.com/EN/News/200402/1a9c7c8b-f67b-4fe8-ac67-7311d7bcc676.htm

February 10, 2004, EUbusiness, EU presses Switzerland as tax standoff heats up
http://www.eubusiness.com/afp/040210164023.p9fi20ny

February 10, 2004, SwissInfo, Switzerland rejects EU tax demand
http://www.swissinfo.org/sen/Swissinfo.html?siteSect=111&sid=4711480

February 9, 2004, Caribbean Net News, Cayman Islands reported to have signed on to EU Tax Directive
http://www.caribbeannetnews.com/2004/02/09/directive.htm

February 9, 2004, EUpolitix.com, by Anna McLauchlin, Savings tax teeters
http://www.eupolitix.com/EN/News/200402/875c969a-1812-46b6-a4f8-176cd498d3cf.htm

February 9, 2004, Financial Times, By Raphael Minder and Andrew Parker, Impasse in EU talks with tax havens
http://www.freedomandprosperity.org/Articles/ft02-09-04/ft02-09-04.shtml

February 6, 2004, Tax-News.com, by Jason Gorringe, House Of Lords Debates Tax Evasion And Avoidance
http://www.tax-news.com/asp/story/story.asp?storyname=14989

February 4, 2004, Tax-News.com, by Amanda Banks, Cayman Optimistic Over EU Tax Deal
http://www.tax-news.com/asp/story/story.asp?storyname=14966

February 3, 2004, Financial Times, By Andrew Parker, Caymans in move on EU tax crackdown
http://www.freedomandprosperity.org/Articles/ft02-03-04/ft02-03-04.shtml

February 2, 2004, SwissInfo, Swiss fail to break deadlock over EU bilaterals
http://www.swissinfo.org/sen/swissinfo.html?siteSect=105&sid=4687065

 

8) Richard Rahn: The Cayman Islands are a role model in world finance.

[Excerpt]

Grand Cayman -- Some of you reading this maybe thinking, "Ah Cayman, isn't that the place with all the illegal financial activity?"

It is true Cayman is the world's largest offshore financial center, and the world's fifth-biggest financial center, even though it is in the middle of the Caribbean on a small, pleasant island with only 40,000 people.

But contrary to the mythology from movies and novels, Cayman did not become rich by catering to criminals. The truth is just the opposite. Think about it for a moment. If you were looking for a place to put your money, would you choose a bank run by incompetents or criminals in a jurisdiction run by the mob, or would you put your money in a bank run by honest and competent bankers in a country with the rule of law?

The fact is that big offshore financial centers, such as Cayman and Bermuda, and other big financial centers, such as Switzerland, the U.K. and the U.S., are all characterized by having honest courts and competent administrators.

Most of the money in Cayman is institutional rather than individual, and it is more difficult for an individual to open an account in Cayman than in the U.S. [Link to full article below:]

February 10, 2004, The Washington Times, By Richard W. Rahn, Offshore finance
http://www.washtimes.com/commentary/20040209-090310-4341r.htm

 

9) Robert J. Samuelson: The European Predicament

[Excerpt]

Let's be clear. If Europe's economy was healthy, it would grow about 4 percent annually for a few years and then settle down to a respectable 2.5 percent or 3 percent. The initial burst would absorb surplus unemployment (the jobless rate is near 9 percent). Once that happened, Europe would ride the gains of new technologies. Nothing like this is occurring. Since 2000, the economy of the "euro zone" (the 12 nations using the euro) has averaged growth of about 1 percent a year. That's bad for Europe -- and everyone else.

In the past year, American-European relations have fixated on Iraq. Europe's loathing of the war distracted attention from its own failures. Its economic model could once be defended as a justifiable political choice. People could select their flavor of prosperity. America's flavor -- more competition and insecurity -- wasn't for everyone. Europe could pick less anxiety and more vacations. It could sacrifice some economic growth for a bigger welfare state (more jobless benefits, universal health care). This argument no longer works.

Why not? Well, the economy is so enfeebled by high taxes and restrictive regulations that it can't pay for all the benefits. The gap between promise and performance must widen and, in the process, spawn disillusion and discord. One early example involves France's and Germany's violation of the Stability and Growth Pact, requiring member countries to hold their budget deficits to less than 3 percent of gross domestic product. In 2002 and 2003, France and Germany failed and, rather than face penalties, forced other countries to suspend the rules. Naturally, smaller countries that complied were furious. [Link to full article below:]

February 4, 2004, The Washington Post, By Robert J. Samuelson, The European Predicament
http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A1079 6-2004Feb3&notFound=true

Other EU Economy articles:

February 4, 2004, Tech Central Station, By Marian L. Tupy, Good Unintended Consequences
http://www.techcentralstation.com/020404E.html

 

10) Weekly Standard: Europe's Wishful Thinking

[Excerpt]

IT IS FOUR YEARS since E.U. leaders met in Lisbon and set out a strategy for economic reform that they claimed would enable Europe to outstrip the United States as the world's leading economic power. Britain's Tony Blair liked the idea of reform, and France's Jacques Chirac liked the idea of besting the United States. So reform it was to be.

One need only dip into the new report to understand that the seeds of American entrepreneurialism cannot successfully be planted in the hostile soil that is today's Europe. The tools that the European Commission would use to catch up with America, and move European GDP up from its present 72 percent of the U.S. level, include such winners as passing a "Framework Directive on eco-design of energy-using products;" devising "social inclusion strategies" and establishing "National Action Plans (NAPs) . . . to set national targets" to improve social cohesion; and developing a "new industrial policy approach." There's more, lots more, including new regulations and taxes.

Meanwhile, back in America, President Bush is trying to reduce both the level of taxation and the burden of regulation. In short, the European Union aspires to American performance, and sees increased involvement of both Brussels' and member states' bureaucracies as the path to that goal, while U.S. policy is to reduce the role of government in business affairs.

EVEN IN BRITAIN, which has taken the lead in fighting the worst manifestations of the E.U. tendency to prefer regulation to markets, government just can't grasp what American entrepreneurship is all about. In a recent report, the Department of Trade and Industry, roughly equivalent to our Department of Commerce but with a much stronger interventionist bent, bemoaned the fact that half of London's small business don't have business plans--and then went on to report that a great many of these benighted firms are--surprise--chalking up higher sales and rising profits. Given the opportunity, any small businessman would tell the government planners that he is succeeding precisely because he spends his time satisfying customers rather than producing elaborate and beautifully illustrated plans of the sort that bureaucrats often use to substitute for accomplishment. [Link to full article below:]

January 27, 2004, Weekly Standard, by Irwin M. Stelzer, Europe's Wishful Thinking: The European Union wants to have a bigger economy than America and their welfare state, too.
http://www.weeklystandard.com/Content/Public/Articles/000/000/003/659rsfvm.asp?pg=1

 

11) Tax Competition Works: Austria Forced To Cut Business Tax

[Excerpt from Tax-News.com:]

"This was, for sure, causing trouble for us," remarked Grasser, noting that Austria's neighbours, Slovakia, Slovenia and Hungary currently levy corporate tax at rates of between 18% and 20% (with Hungary soon to cut its rate to 16%). However, he maintained that "tax competition is good" and is an essential ingredient of a healthy Europe.

Consequently, Austria is cutting its corporate tax rate from 34% to 25% from next year and may well be followed by other member states looking to maintain levels of investment. Link to full article below:]

February 3, 2004, Tax-News.com, by Ulrika Lomas, Tax Competition From The East Forces Austria To Cut Business Tax
http://www.tax-news.com/asp/story/story.asp?storyname=14942

Other tax competition articles:

February 19, 2004, The New York Times, By Gregory Crouch, Shaken Trust: The Netherlands Rethinks an Offshore Industry
http://www.nytimes.com/2004/02/19/business/worldbusiness/19dutch.html

February 9, 2004, Tax-News.com, by Mary Swire, China's Tax Reforms Will Reduce Government's Role In Economy
http://www.tax-news.com/asp/story/story.asp?storyname=15000

February 4, 2004, The Moscow Times, By Patrick Gill, Moscow Expats Get Financially Savvy
http://www.themoscowtimes.com/stories/2004/02/04/045.html

February 2004, Manila Bulletin Online, By Fil C. Sionil, OBU, FCDU tax exemption to lure foreign investments
http://www.mb.com.ph/BSNS200402091661.html

 

12) Germany Expresses Opposition to EU Tax Plans

The following is Dan Mitchell's commentary on Germany's opposition to the EU tax plan that can be found on CF&P's "The Market Center Blog"

Miracles do happen. Germany consistently has been on the wrong side of international tax issues in recent years, so it is a refreshing surprise to find that the socialist government in Berlin is opposing European-wide taxes imposed by Brussels. According the European Foundation Intelligence Digest:

    The German government has said that it does not support the attempt by the European Commission to introduce a European tax. ...The spokesman said that the EU's problems were not so much on the income, but on the expenditure side. In other words, it should cut spending rather than increase tax. The spokesman was speaking following the publication in the Handelsblatt of a report claiming that Brussels was to start a formal initiative in favour of a euro tax on 10th February, and that it would be proposed as a part of the new budget which must be voted for 2007-2013. The EU, according to the report, was going to appropriate to itself value added tax, energy tax or corporation tax. With these proposals, Brussels would receive for the first time its own right to raise taxes.

February 5, 2004, European Foundation Intelligence Digest, Berlin rejects euro tax
http://www.e-f.org.uk/pubs/id/Issue%20No%20185.pdf

CF&P's "The Market Center Blog"
http://www.freedomandprosperity.org/blog/blog.shtml

February 4, 2004, LawAndTax-News.com, by Ulrika Lomas, Germany Expresses Opposition To EU Tax Plans
http://www.tax-news.com/asp/story/story.asp?storyname=14960

 

13) Mark Hunter: Something Is Rotten In the State of France

[Excerpt]

The conviction on corruption charges of Alain Juppe, the leader of France's biggest political party, the UMP, and until now its likely candidate as successor to President Jacques Chirac in 2007, should serve as a wake-up call to other members of the country's political elite. But it probably won't, precisely because Mr. Juppe embodies their failure to understand their increasingly central role in France's decades-long economic and social crisis.

Since the early 1980s, beginning with the governments of the late Francois Mitterrand and continuing under his archrival, Mr. Chirac, the French have been asked to accept steadily deeper sacrifices in terms of their buying power, job security, retirement benefits and health insurance, along with a rising tax burden. One can argue about whether and to what degree these sacrifices are necessary and inevitable, but one cannot argue about the increasingly dangerous perception that they have not been shared to anywhere near the same extent by the political elites.

On the contrary, those elites, on both right and left, have persistently sought to protect their interests -- as a caste and as individuals -- from the forces bearing on their fellow citizens. An annotated list of the tactics France's politicians have employed in pursuit of this end would require a fairly long book. The one for which Mr. Juppe was just convicted is "illegal taking of profit" -- or more exactly, getting companies wishing to do business with public entities to put party officials on their books in "no-show" positions.

This isn't the first instance in which Mr. Juppe demonstrated the elite's particular sense of entitlement. [Link to full article below:]

February 6, 2004, Wall Street Journal, By Mark Hunter, Something Is Rotten In the State of France
http://www.freedomandprosperity.org/Articles/wsj02-06-04/wsj02-06-04.shtml

 

14) How corrupt is France?

[From David Frum's Diary -- January 16, 2004]

How corrupt is France? It is often said that one reason that Jacques Chirac ran for re-election as president in 2002 was to preserve his immunity from prosecution. But the full awfulness of the situation – the way in which bribery and the theft of public funds pervades French life – is not well understood in the United States. For a vivid introduction to the problem, see the extremely interesting cover story in the current issue of Britain's Prospect magazine.

The story details the doomed attempted of one magistrate to get to the bottom of a series of scandals involving hundreds of millions of dollars looted from public companies and diverted to political parties and private individuals - Francois Mitterand's national system of kickbacks on local construction projects - and formal and informal state controls on the media to suppress coverage of the scandal.

It ought to be more widely understood in the United States how much European corruption -- and French corruption in particular -- damages the trans-Atlantic relationship. Kickbacks and bribes play an especially large role in Europe's trade with the Middle East. Much of the European loathing for those Americans who want to change the Middle East is pretty directly traceable to the fear that change in the region will threaten the livelihood of powerful Europeans and the funding of European political parties.

European corruption influences European press coverage of the United States as well. European journalists obsess over "neocons" in American politics precisely because they know that in their societies, the important political decisions are made by concealed, sinister, self-interested forces - and they find it hard to imagine that American politics could be different. Meanwhile, American journalists cover Europe like some wire service circa 1952: with a charmingly naive faith that everything actually is just the way it seems on the surface, and that the spoken words of European politicians actually give some insight into their real motives. Because US politics are so transparent and responsive, the American media is genuinely flummoxed by societies in which shadowy conspiracies really do exist. [Link to Diary and Prospect Magazine article below:]

January 16, 2004, National Review Online, David Frum's Diary, Communication Gap
http://www.nationalreview.com/frum/diary011604.asp

February 2004, Prospect, by Tim King, French favours: A decade of corruption trials has chastened the French elite. But few heads have rolled and little has changed. What are the roots of French corruption?
http://www.prospect-magazine.co.uk/start.asp?P_Article=12357

 

15) Jerry Z. Muller: The Morality of the Market

[Excerpt]

I began my book The Mind and the Market by noting that "Capitalism is too important and complex a subject to be left to economists." But I could equally have said that "morality is too important and complex a subject to be left to philosophers." In our society, defenses of the market come primarily from those concerned with economic and material well-being. Those who see themselves as the protectors of morality are more likely to be antipathetic to the market. I want to focus on the positive moral effects of the market that tend to get overlooked in narrowly economistic discussions about production and distribution. So the "good arguments" in my title refer to plausible but often overlooked insights into the beneficial moral effects of the market. Many of these benefits also have potential costs -- which I want to note without elaborating, since they tend to receive the most attention from moralists.

One perennial pitfall in thinking about the moral effects of capitalism is issue of comparison. When philosophers ask about the morality of capitalism, they too rarely ask "compared to what"? Of course capitalism is morally inferior to many a philosophical utopia. And our comparative evaluation of capitalism is further skewed by the fact that when we compare capitalism to past regimes, it is often implicitly from the perspectives of those who profited most and suffered least in past systems -- from the perspectives of lords rather than serfs, of masters rather than slaves, aristocrats rather than commoners. [Link to full article below:]

January 15, 2004, Tech Central Station, By Jerry Z. Muller, The Morality of the Market
http://www.techcentralstation.com/011504A.html

 

16) Peter Clarke: Taxing problem has an answer

[Excerpt]

WOULD you be surprised to learn the top tax rate in Baghdad is 15 per cent, while in Moscow, where a uniform rate has been in place since 2000, the figure is 13 per cent?

While these may seem low compared with the UK's top rate of 40 per cent, the real jolt may be the discovery the harvest of tax in Russia has doubled since the turn of the decade.

And the men who influenced Russian policy-makers are a group of United States economists, who acknowledge their ideas are derived from Adam Smith's writings on tax policy when he was a Customs officer in Edinburgh.

Smith's remarkable legacy of ideas is also being applied in Baghdad. The American authorities, inspired by the same insights, have imposed a uniform tax of 15 per cent. . . .

Americans are so oppressed by their Inland Revenue Service it has provoked a revolt among intellectuals which is reaching as far as Moscow and Baghdad.

All the major breakthroughs in science turn out to be accidental. Years of methodical research often need the magic of a flash of inspiration - Alexander Fleming's discovery of penicillin is all the more admirable as it was based upon failing to clean his Petri dishes with their mouldy samples.

In the world of economics, one of the supreme moments occurred while two men waited for lunch to be served in a Washington restaurant on December 4, 1974.

Professor Art Laffer says he was sipping a drink talking to Dick Cheney, now the US vice-president but then President Ronald Reagan's chief of staff. [Link to full article below:]

January 20, 2004, Edinburgh Evening News Online, by Peter Clarke, Taxing problem has an answer

http://edinburghnews.scotsman.com/business.cfm?id=71282004

 

17) French Parliamentary Report Suggests Worldwide Taxes to Counter Globalization

[Excerpt from BNA]

A French parliamentary commission Jan. 14 suggested that an expanded version of the United Nations Security Council be granted new authority to regulate globalization of the world economy, recommending that this body be empowered to issue global rules and regulations on essential public goods and to create global taxes to fund their protection.

The parliamentary foreign affairs commission issued its call for imposition of new worldwide taxes to control globalization in a report presented to French Prime Minister Jean-Pierre Raffarin.

MPs listed a series of "essential public goods" that should fall under the new globalization mandate--including access to clean water, food, education, health care, and protection of the environment--and three potential means by which the so-called International Council could raise funds to meet these goals:

   *   global tax on international financial transactions, also known as the Tobin Tax;
   *   a global tax on the international arms trade; and
   *   global tax on greenhouse gas emissions.

While the report expressed no preference between the three forms of potential global taxation, former Prime Minister Edouard Balladur, who heads the parliamentary foreign affairs commission, told reporters he was "seduced" by the Tobin Tax, in spite of well-known implementation difficulties.

. . . The parliamentary report will be forwarded to a working group that has been studying the feasibility of creating a global tax system to fund development projects under the direct authority of French President Jacques Chirac since late 2003.

France formed the working group in November 2003, after Chirac vowed to put the weight of the French presidency behind a wide-ranging study into whether international taxation could provide a counterbalance to the ongoing globalization of the world economy. [Please see bna.com to get the full article]

[Source: January 20, 2004, By Lawrence J. Speer, Bureau of National Affairs, French Parliamentary Report Suggests Worldwide Taxes to Counter Globalization]

 

18) Tech Central Station:  Supply-Side Swiss

[Excerpt]

In a recent contribution to National Review Online, Jerry Bowyer attacked the Bush tax cuts package for not doing enough to lower the tax burden of the rich. If the reality of the tax cuts had lived up to the rhetoric of its opponents, Bowyer explains, the economic recovery would have taken off much quicker and much more strongly than it did: "It wasn't until May of last year, when 'the rich' were dealt into the game, that the weak recovery strengthened."

Articles like that are bound to get on the nerves of those who share the sentiments of the 1970s British Labour Party Chancellor Denis Healy, who famously claimed that the purpose of any income tax system should be to "squeeze the rich till the pips squeak." But if this is enough to get them worked up, what would they make of the recently implemented reform of personal income tax in the Swiss canton of Schaffhausen? Because towards the end of last year, the local Parliament there decided to introduce a new income tax that has as its cornerstone the principle of regression. In other words: the more money you make, the less tax you pay. As of the first of January 2004, in the canton of Schaffhausen, it actually pays to get rich.  

Instead of flying into a Howard Dean-like rage, though, tax addicts would do well to consider the merits of the Schaffhausen measures before rejecting them in a knee-jerk fashion. No sane person, after all, could oppose a system of taxation that is morally sound and economically efficient -- which is precisely what these measures are all about. The morality of it is easy enough to explain. It is after all fairly widely accepted that working hard and saving for a rainy day both constitute morally good behavior. Any tax system that claims to have its basis in morality would therefore have to encourage precisely those activities. Whatever else they might like to say about it, the taxaholics would have to admit that the Schaffhausen income tax does exactly that -- and does it in spades. Who wouldn't want to go out and work, work, work, if every extra Swiss Franc earned will be taxed less than the previous one? [Link to full article below:]

January 27, 2004, Tech Central Station, By Joshua Livestro, Supply-Side Swiss
http://www.techcentralstation.com/012704A.html

 

19) CF&P Clips

February 19, 2004, Servihoo.com, Time running out on US tax breaks, Lamy warns
http://servihoo.com/channels/kinews/v3news_details.php?id=33258&CategoryID=47

February 19, 2004, St. Petersburg Times, By Graham Brink, Where shrewd financing meets tax evasion: "Offshore accounts" aren't just for the powerboating jet-set anymore. But if you have one and try to hide it from the IRS, it's still just as illegal.
http://www.sptimes.com/2004/02/19/Worldandnation/Where_shrewd_financin.shtml

February 16, 2004, Tax-News.com, by Ulrika Lomas, EU Firms Ask Lamy To Soften Stance On US Trade Dispute
http://www.tax-news.com/asp/story/story.asp?storyname=15081

February 16, 2004, Tax-News.com, by Mike Godfrey, Export Tax Issue May Take Back Seat As Election Fever Takes Hold
http://www.tax-news.com/asp/story/story.asp?storyname=15086

February 15, 2004, Scotland on Sunday, by Jim Dow, Dirty cash rules perplex solicitors
http://business.scotsman.com/index.cfm?id=181742004

February 15, 2004, The Telegraph, Swiss peak on Wall Street: UBS has built a credible investment bank to compete with its bulge bracket US rivals, reports Grant Ringshaw
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2004/02/15/ccubs15.xml&sSheet =/money/2004/02/15/ixcoms.html

February 10, 2004, The Standard (China), By Mukul Munish, Barclays chooses HK as regional hub
http://www.thestandard.com.hk/thestandard/news_detail_frame.cfm?articleid=45132&intcat id=1

February 9, 2004, The Economist, Blaming everyone but themselves: Europe's economy is too restrained, say the Americans. America's is too gluttonous, say the Europeans
http://www.economist.com/agenda/displayStory.cfm?story_id=2402772

February 9, 2004, The Nassau Guardian, By Martella Matthews, Who's Who In Financial Services: Fight against "Miami Vice" stereotype of offshore centres
http://www.thenassauguardian.com/business/284212660539280.php

February 5, 2003, The Nassau Guardian, By Lindsay Thompson, Govt aims to arrest dwindling IBCs
http://www.thenassauguardian.com/business/279748704190318.php

February 5, 2004, The Wall Street Journal, By Richard W. Rahn, The Deficit Bugaboo
http://www.freedomandprosperity.org/Articles/wsj02-05-04/wsj02-05-04.shtml

February 5, 2004, Tax-News.com, by Ulrika Lomas, Slovakia Axes Dividend Tax
http://www.tax-news.com/asp/story/story.asp?storyname=14979

February 4, 2004, Associated Press, By Brad Cain, Oregonians soundly defeat tax increase
http://www.oregonlive.com/newsflash/regional/index.ssf?/base/elections-0/10758572423242 40.xml

January 29, 2004, The Economist, A taxing battle
http://www.economist.com/finance/displayStory.cfm?story_id=2388628

January 16, 2004 , Financial Times, By Peter Nichols, Understanding - Corporate Governance: Viewpoint: Joining battle against the scourge of good business. Bribery and corruption poison the business environment,making good governance impossible, says Philip Nichols
http://www.freedomandprosperity.org/Articles/ft01-16-04/ft01-16-04.shtml

January 12, 2004 , Financial Times, By Paul Betts, OECD urges more investor protection
http://www.freedomandprosperity.org/Articles/ft01-12-04/ft01-12-04.shtml

 

Best regards,

Andrew Quinlan
Center for Freedom and Prosperity
President
202-285-0244
quinlan@freedomandprosperity.org
www.freedomandprosperity.org

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