CF&P E-mail Update, March 31, 2005

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Center for Freedom and Prosperity's E-mail Update

1) 51 Months is Enough: Coalition Urges Immediate Withdrawal of Proposed Clinton-Era IRS Regulation

2) Richard Rahn's Excellent Primer on the Tax Competition Battle

3) Andrew Quinlan:  The Outlook for Tax Competition

4) Dan Mitchell to Speak in Ireland on Benefits of International Tax Competition

5) Andrew Quinlan to Bring Tax Competition Message to Panama

6) America Benefits from Offshore World: Caribbean Banking Centers Invest nearly $1.2 Trillion in U.S. Economy

7) Dan Mitchell Highlights Tax Reform Revolution in Former Soviet Bloc Nations

8) U.S. Tax-Writing Committee Praises Ireland's Supply-Side Tax Revolution

9) German corporate tax cut signals victory for tax competition

10) U.S. government confirms that money laundering is primarily a problem in the "onshore" world

11) Major New Study Demonstrates that Government Spending Undermines Economic Growth

12) Flat Tax Revolution Wins Attention from Establishment Media

13) New report shows the EU lagging behind the US

14) European Union is a threat to principles of individual liberty

15) Excessive bureaucracy driving business from Miami to Panama

16) Left-wing report attacks low-tax jurisdictions


1) 51 Months is Enough: Coalition Urges Immediate Withdrawal of Proposed Clinton-Era IRS Regulation

The Center for Freedom and Prosperity Foundation, joined by more than 40 of the country's largest and most influential free-market groups, urged Treasury Secretary John Snow to "permanently withdraw a proposed Internal Revenue Service (IRS) regulation (Reg 133254-02) that would force U.S. banks to report deposit interest paid to nonresident aliens."

In the letter sent to the Treasury Secretary, the members of the Coalition for Tax Competition stated, "This initiative is inconsistent with current law and it will undermine our economy's performance by causing capital to flee the American banking system. The regulation was misguided when issued in the final days of the Clinton Administration, and the cosmetic changes the IRS put forth in 2002 do not address the proposed regulation's fundamental shortcomings. …This regulation is bad tax policy and bad regulatory policy. It is inconsistent with President Bush's tax reform agenda and it will hurt the U.S. economy by reducing the amount of capital for workers, consumers, homeowners, and entrepreneurs." [Full text of letter below with web link included.]

"Since January 2001, this proposed regulation has undermined U.S. banks as they compete for global capital," said Andrew Quinlan, President of the Center for Freedom and Prosperity Foundation. "In the last 51 months, not one Member of Congress has endorsed the proposed rule. In fact, 18 Senators and more than 90 House Members have asked for its withdrawal," added Quinlan. [Link to full statement and letter below:]

Link to full press statement:

Link to the full text of the Coalition for Tax Competition Letter:

PDF Version of Coalition Letter:

For more information on the regulation go to the CF&P's dedicated web page:

Complete list of opposition to IRS Regulation:


2) Richard Rahn's Excellent Primer on the Tax Competition Battle

For the last decade, the high-tax countries of the European continent have been engaged in an aggressive and largely unknown war against low tax-rate countries around the world. This is not just a war of rhetoric, but one in which Continental governments are trying to destroy the economic livelihood and prospects of many smaller and poorer countries. The war has the goal of stemming the flow of savings and investment to low-tax entities from the high-tax countries.

[Excerpt from Dr. Rahn's article]

These governments are using two basic strategies. The first is to try to force low-tax countries to raise their tax rates, particularly on capital—that is, taxes on individual and corporate income, including taxes on interest, dividends and capital gains. They argue that low-tax countries are economic free-riders, enjoying the protections of the welfare state paid for by higher-tax countries while avoiding taxing their own citizens at high rates. The second strategy is to make it difficult for savers and investors to move their capital freely around the world to its best use. To do so, high-tax countries are attempting to force their capital-friendly neighbors to report what funds they receive from citizens and companies of high-tax countries so they can be "properly" taxed—in their home countries.

Economists have long known that taxing capital is economically destructive. Nobel Prize-winning economist Robert Lucas, after carefully reviewing relevant economic studies, concluded in 2003 that reducing capital-income taxation from its current level to zero (using other taxes to support an unchanged rate of government spending) would result in overall welfare gains of "perhaps 2 to 4 percent of annual consumption in perpetuity." [Link to full article below:]

Spring 2005, The National Interest, by Richard Rahn, The Taxing of Nations


3) Andrew Quinlan: The Outlook for Tax Competition

[Excerpt from Andrew Quinlan's article]


Tax competition is a good thing. Despite longstanding efforts of high-tax welfare states to harmonize taxes at a uniformly high level, nations that have lowered taxes have flourished.

Take Ireland, for instance. Not that long ago, Ireland was a high-tax nation. And it suffered from 15% unemployment and some of the EU's lowest living standards. Since slashing tax rates in the 1990s, Ireland has enjoyed a remarkable turnaround. The former "Sick Man of Europe" is now the "Celtic Tiger." Income is soaring, unemployment has plummeted to 5% and Ireland is now one of the richest economies in Europe.

Ireland isn't alone in proving that tax competition works. The newest success stories come from the former communist states of Eastern Europe. Since 1994, eight European nations have adopted a flat tax—Estonia (1994), Latvia (1995), Russia (2000), Serbia (2003), Ukraine and Slovakia (2004), and Georgia and Romania this year. Serious discussions are underway to implement a flat tax in Bulgaria, the Czech Republic, Finland, Poland and Spain. And outside this "New Europe," even communist China is getting the flat tax fever. In 2003, they invited flat tax guru Alvin Rabushka to Beijing to discuss the possibility.

These developments, along with the results of the recent U.S. elections, make it increasingly unlikely that the EU and OECD initiatives to compel low-tax nations to enforce the tax laws of high-tax countries like France and Germany will succeed. Indeed, on a wide range of issues, the elections represent a significant victory for tax competition and a clear defeat for the advocates of tax harmonization. [Link to full article below:]

March 2005, The Sovereign Individual, by Andrew Quinlan, Global Tax Analysis: The Outlook for "Tax Competition": A Flat Tax for the U.S.A.?


4) Dan Mitchell to Speak in Ireland on Benefits of International Tax Competition

Dan Mitchell of the Heritage Foundation will speak at the Finance Dublin's 6th Annual Conference on Preparing for the Future of Ireland's International Financial Services Sector. Mitchell April 5th talk will be on "International Tax Competition, Ireland's Position, and the EU Financial Services Industry.  Please go to for more information.


5) Andrew Quinlan to Bring Tax Competition Message to Panama

The Center for Freedom and Prosperity's President Andrew Quinlan will be a featured speaker at the Annual Convention of the Panama Banking Association.  The event will be held April 26-27 at the Caesar Park Hotel in Panama City. Quinlan's topic of discussion will be "The Importance of Tax Competition, Financial Privacy and Fiscal Sovereignty." A copy of his PowerPoint presentation will be available online.  Check CF&P's web page for more information in the near future []


6) America Benefits from Offshore World: Caribbean Banking Centers Invest nearly $1.2 Trillion in U.S. Economy

[Excerpt from Treasury report]

New U.S. Treasury data shows that America's low-tax advantage and tax haven policies have helped attract $2.9 trillion of foreign capital, including more than $1.2 trillion from Caribbean banking centers. [Treasury link below:]

December 2004, U.S. Treasury, U.S. Liabilities to Foreigners Reported by U.S. Banks, Brokers and Dealers with Respect to Selected Countries


7) Dan Mitchell Highlights Tax Reform Revolution in Former Soviet Bloc Nations

Given their Marxist pasts, it is ironic that nations in the former Soviet Bloc have thrown off the shackles of communism and are competing with each other to adopt flat tax systems with the lowest possible rate. Dan Mitchell comments on this remarkable development in Tax Notes International:

[Excerpt from Dan Mitchell's article]

Estonia was the first to adopt a flat tax, implementing a 26 percent rate in 1994 just a few short years after the collapse of the Soviet Union. The other two Baltic nations enacted flat taxes in the mid-1990s, with Latvia choosing a 25 percent rate and Lithuania picking 33 percent. Along with other free market reforms, the flat tax significantly improved economic growth, and the ''Baltic Tigers'' became role models for the region. Learning from its neighbors, Russia stunned the world with a 13 percent flat tax that went into effect in 2001. Showing that truth is stranger than fiction, the former ''Evil Empire'' adopted a flat tax 4 percentage points lower than the supposedly radical 17 percent flat tax proposed by former U.S. Rep. Dick Armey and presidential candidate Steve Forbes. [Link to full article below:]

March 14, 2005, Tax Notes International, by Daniel J. Mitchell, Eastern Europe's Flat Tax Revolution


8) U.S. Tax-Writing Committee Praises Ireland's Supply-Side Tax Revolution

[Excerpt from Ways & Means report]

Ireland, once a country plagued by slow growth and high unemployment, has experienced some of Europe's most remarkable growth rates during the last 20 years.

Is this simply the luck o' the Irish? NO! Drastic reductions in marginal tax rates propelled Ireland's economy forward.

Lowering marginal tax rates in Ireland has resulted in one of Europe's great success stories of the last quarter-century: rapid job growth, rising living standards, and massive inflows of foreign investment. Ireland now boasts one of Europe's highest per capita GDP levels and lowest unemployment rates.

Ireland's success demonstrates that lowering marginal tax rates attracts investment, create incentives to work, and is the best possible stimulant to the long-run health of the economy. [Link to full article below:]

March 16, 2005, U.S. House of Representatives' Committee on Ways and Means, Chairman Bill Thomas' Fact Sheet on the Irish Miracle


9) German corporate tax cut signals victory for tax competition

Both the Wall Street Journal and the Economist comment on the corporate rate reduction in Germany and agree that tax competition is the driving force for better tax policy:

[Excerpt from the WSJ]

When eight formerly communist countries in central Europe joined the EU last May, German Chancellor Gerhard Schröder was among the earliest and loudest critics of their tax-cutting ways. Low tax rates "are not the way forward" for Germany's new eastern neighbors in the EU, he warned on the eve of the Union's enlargement. Well, what a difference a year makes. Last week the German chancellor announced plans to cut the federal corporate tax rate to 19% from 25% -- which just happens to be the corporate tax rate of Poland, one of the new EU member Mr. Schröder was so critical of last spring. ...The move will put the country in a more competitive position than euro-zone countries such as the Netherlands, France and Italy, as the nearby chart shows. And it may well trigger a further round of tax cuts in the region, where rates have already come down in several countries since the euro's introduction. Spooked by Germany's surprise move, the Austrian finance ministry felt obliged to immediately remind potential investors that its tax rates will remain lower even after Germany will have implemented its cuts. While the euro has helped steer Europe to the right policy choices, last year's accession of Central and Eastern European countries made those reforms only more urgent. The flat-tax revolution in the former communist countries has contributed much to the pressure on "Old Europe" to lower taxes as well. ...In Slovakia, which also has a 19% tax rate, the headline rate is the one you actually pay -- no further levies payable -- and it's the rate applied to corporate profits, wages, and VAT alike. Thanks in no small measure to the flat tax, the country is expected to become the world's biggest car producer per capita in 2007. The Baltic countries, which pioneered the movement in Europe, are planning further cuts as well. Estonia wants to lower its rate to 20% from 24% to stay competitive. In Poland, both the center-left government and the opposition Civic Platform are proposing flat taxes -- of 18% and 16% respectively -- ahead of elections later this year. And in Romania, which will likely join the EU in two years, the new prime minister pushed through last December a 16% flat tax in record time to ensure it took effect Jan. 1. ...With Germany lowering its federal corporate tax rate to below 20%, Europe's tax competition, previously restricted largely to the margins of the newly expanded EU, has invaded its very heart. Germany's move makes it more likely that some of Europe's other critics of "new Europe's" tax-competing ways will follow suit. [Link to full article below:]

[Excerpt from The Economist]

...the announcement has nonetheless made economic observers sit up and take notice, for it seems to signal that the German government may be conceding defeat in the battle over "harmful tax competition". Along with France and Belgium, the Germans have been leading the attacks on the practices of European Union members-primarily Ireland-who charge low rates of corporate income tax. For years they have been calling for tax harmonisation among members, code for forcing low-tax countries to raise their rates. The OECD, a club for rich countries, has also got involved: in 2000 it published a blacklist of 35 nations it identified as havens for large companies looking to shrug off their rightful tax burden. ...Margaret Thatcher and Ronald Reagan led the way with sweeping changes to their tax codes. Back then, top marginal rates of 70-80% were not uncommon, and tax laws everywhere were riddled with decades-worth of accumulated deductions. Mrs (now Lady) Thatcher and Reagan slashed top rates and eliminated many deductions, creating tax codes with lower marginal rates on a much broader tax base. This, it is generally agreed by economists, is a recipe for faster economic growth, and over the past two decades continental Europe has followed suit. That hasn't meant a lower tax burden overall. On the contrary, taxes as a percentage of GDP grew steadily throughout the OECD from the mid-1970s to 2000, falling only during the recent recession. Now, however, tax reform may have entered a new stage. Even as the global economy recovers, its imperatives are making it harder for countries to levy taxes as they would like, particularly on capital. Freer trade makes it much easier for companies to move to low-tax locations (it is not much good relocating your factory to Hungary if your goods face a 50% tariff going back to the home country). And faster communications make it ever easier to locate new services abroad. [Link to full article below:]

March 21, 2005, The Wall Street Journal, Review & Outlook, Gerhard's Epiphany,,SB111135661927584527,00.html?mod=opinion&ojcontent=ote p (subscription required)

March 21, 2005, The Economist, Taxing times

The Market Center Blog, March 22, 2005


10) U.S. government confirms that money laundering is primarily a problem in the "onshore" world

The U.S. State Department has issued its annual International Narcotics Control Strategy Report, and it lists 55 nations/jurisdictions of "primary concern." Interestingly, only 10 of those jurisdictions are so-called tax havens, fewer than one-fourth of the nations and/or territories that were on the OECD's original blacklist. Speaking of the OECD, 17 of its 30 members are listed as nations of "primary concern." Yet how many of these nations have ever been placed on any FATF blacklist? Not surprisingly, the answer is zero. It also is not surprising that politicians from the "onshore" world of glass houses continue to throw stones:

[Excerpt from the report]

The "Jurisdictions of Primary Concern" are those jurisdictions that are identified pursuant to the INCSR reporting requirements as "major money laundering countries." A major money laundering country is defined by statute as one "whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics-trafficking." However, the complex nature of money laundering transactions today makes it difficult in many cases to distinguish the proceeds of narcotics trafficking from the proceeds of other serious crime. Moreover, financial institutions engaging in transactions involving significant amounts of proceeds of other serious crime are vulnerable to narcotics-related money laundering. The category "Jurisdiction of Primary Concern" recognizes this relationship by including all countries and other jurisdictions whose financial institutions engage in transactions involving significant amounts of proceeds from all serious crime. [Link to full article below:]

March 2005, Bureau for International Narcotics and Law Enforcement Affairs, International Narcotics Control Strategy Report-2005

The Market Center Blog, March 16, 2005


11) Major New Study Demonstrates that Government Spending Undermines Economic Growth

[Excerpt from Dr. Mitchell's Backgrounder]

A growing government is contrary to America's economic interests because the various methods of financing government—taxes, borrowing, and print­ing money—have harmful effects. This is also true because government spending qua government spending is often economically destructive. The many reasons for the negative relationship between the size of government and economic growth include: The extraction cost, the displacement cost, the negative multiplier cost, the behavioral subsidy cost, the behavioral penalty cost, the market distortion cost, the inefficiency cost, and the stagnation cost.

The common-sense notion that government spending retards economic performance is bolstered by cross-country comparisons and academic research. International comparisons are especially useful. Government spending consumes almost half of Europe's economic output—a full one-third higher than the burden of government in the U.S. This excessive government is associated with sub-par economic performance…

[Link to full study below:]

March 15, 2005, Heritage Foundation Backgrounder #1831, by Daniel J. Mitchell, The Impact of Government Spending on Economic Growth


12) Flat Tax Revolution Wins Attention from Establishment Media

The Christian Science Monitor and the Financial Times are hardly free market newspapers, so it is especially noteworthy that they both have articles detailing the success of the flat tax revolution in Eastern Europe. The Monitor's reporter deserves special praise for acknowledging the Marxist origins of progressive taxation (something that would lead to screams of "McCarthyism" and "red-baiting" if stated by a conservative):

[Excerpt from the Christian Science Monitor]

Last January, Slovakia became the sixth Eastern European country to adopt a flat tax, which means all income-earners pay the same rate. Since then, Romania and Georgia have followed suit, creating a global proving ground for the concept. In the process, flat-taxers have moved Eastern Europe from a Communist backwater to an investment spring - pressuring its higher-taxed Western neighbors to adapt to the new environment. ...Mr. Bush praised Slovakia's tax-reform efforts during a trip there last month. "I really congratulate ... your government for making wise decisions," he said. Western Europe feels differently. To support large governments and sizable welfare payouts, many Western European countries impose a triple-tiered tax regime of Value-Added Taxes (VAT), akin to a sales tax, high taxes on corporate revenue, and personal tax rates that can exceed 50 percent. ...France and Germany want to harmonize tax rates within the EU, and bring flat-tax rebels under a unified code. ..."The challenge that Western Europe has is that you have a lot of entrenched interest groups," says Waddell. "When you try and put in place a flat tax, you take something away from somebody else." ...Flat taxes used to be the norm in Western countries. But in the 19th century, Communism founder Karl Marx listed a "heavy progressive" tax as a top priority. Soon, higher income-earners were being taxed at higher rates around the world. The irony today is that every flat-tax country (except Hong Kong) is a former Communist nation. ...last month, a joint venture between a German transmissionmaker and Ford Motor Company announced a $395 million investment in eastern Slovakia. The flat tax is "a very important factor," for these new companies, says Kocis. Trade experts say foreign investment has been flowing into Slovakia at a higher rate since the tax reform. In 2003, the government's trade development agency, SARIO, brought in 22 investment projects that created 7,500 new jobs. In 2004, it brought in 47 projects worth more than 12,700 jobs. [Link to full article below:]

[Excerpt from the Financial Times]

The adoption of flat tax systems in eastern Europe - following their earlier introduction in Hong Kong and the Channel Islands - has sparked growing interest in western Europe and the US. Advocates, led by several prominent think-tanks in western capitals, say flat taxes, involving a single rate levied on a broad base, increase tax revenues by boosting the economy and reducing avoidance. ...This month, Poland's centre-left government announced that it would introduce a flat tax system by 2008. The new scheme would set taxes on all personal income and corporate profits, as well as value-added tax, at 18 per cent. Even if, as is likely, the current government loses parliamentary elections later this year, Poland is still expected to introduce a similar scheme because the opposition favours a flat tax rate of 15 per cent. ...Advocates in government view it as a means of boosting tax revenues and attracting foreign investors. In much of the industrialised world there has already been a marked trend towards flatter, or simpler tax systems. Over the past 20 years, the number of tax bands in most countries has been drastically reduced, according to the OECD. ...Nine eastern European countries, from Estonia in 1994 to Romania and Georgia this year, have set low, flat rates on personal income and often equally low corporate taxes. The clearest benefits are easier administration and a better understanding of tax bills. Lowering the tax rate and broadening the base discourages tax avoidance and evasion. ...Supply-side economists argue that an economy will benefit substantially from the increased savings and investments created when citizens are allowed to keep more of their earnings. In eastern Europe, several flat tax countries are, indeed, booming. ...In Slovakia, where the economy has boomed with the help of foreign investment, officials say the flat tax has helped attract investors. ...Charles Robertson, an economist for ING Bank, notes that Estonia has applied a flat tax for more than a decade without opposition. "Estonia has done incredibly well, and no political party is saying 'It is about time we tax the rich a little more'." [Link to full article below:]

March 8, 2005, The Christian Science Monitor, By Andreas Tzortzis, Flat-tax movement stirs Europe

March 29 2005, Financial Times, By Vanessa Houlder, Christopher Condon and,Robert Anderson, Advocates of flat tax point to 'success' in eastern Europe (subscription required)

The Market Center Blog, March 9, 2005

The Market Center Blog, March 29, 2005


13) New report shows the EU lagging behind the US

Looking at various measures of economic performance, a pan-European business organization has issued a report showing that it would take between 18 and 118 years for the EU to catch up to the US - and that assumes that EU economic performance exceeds US economic performance by 0.5 percent per year. But since the EU has been growing slower than the US thanks to excessive government, the gap will likely become even larger:

[Excerpt from the EuroChambres' report]

It will take the EU until 2023 to reach US levels of employment, and then only if EU employment growth will exceed that of the US by 0.5% p.a. [per annum]. Europe's employment level for 2003 was achieved by the US in 1978. ...It will take the EU until 2123 to reach US levels of R&D investment, and then only if EU investment will exceed that of the US by 0.5% p.a. (Note: Since 1995 the average growth for the US has exceeded the EU rate.) Europe's R&D investment for 2002 was achieved by the US in 1979. ...It will take the EU until 2072 to reach US levels of income per capita, and then only if EU income growth will exceed that of the US by 0.5% p.a. (Note: Since 1997, the average US growth has been higher.) * Europe's income for 2003 was achieved by the US in 1985. ...It will take the EU until 2056 to reach US productivity rates per employed, and then only if EU productivity growth will exceed that of the US by 0.5% p.a. (Note: Since 1994, the average US growth has been higher.) Europe's level of productivity for 2003 was achieved by the US in 1989. [Link to full article below:]

March 11, 2005, EuroChambres, Time for a fresh start But time is not on our side: A Comparison of European and US Economies Based on Time Distances BRES%20Study%20%27Time%20For%20a%20Fresh%20Start%27.pdf

The Market Center Blog, March 14, 2005


14) European Union is a threat to principles of individual liberty

Former Delaware Governor Pete DuPont touts Czech President Vaclav Klaus and his efforts to fight centralization from the Brussels-based E.U. bureaucracy:

[Excerpt from Gov. DuPont's column]

When the Berlin Wall fell in 1989 and the Velvet Revolution came to Czechoslovakia, Mr. Klaus became finance minister in the new democracy. He became prime minister in 1992, and later president. His market principles replaced communism with freedom and choice; he liberated prices and foreign trade, deregulated markets and privatized state ownership of assets. Communism was dismantled and prosperity came to his country. But now President Klaus sees an unsettling new challenge: the zeal of Old Europe--France, Germany, Brussels--to impose collective choices on New Europe--Poland, Denmark, the Czech Republic, Ireland. "Ten years ago," Mr. Klaus writes, "the dominant slogan was: 'deregulate, liberalize, privatize.' Now the slogan is different; 'regulate . . . get rid of your sovereignty and put it in the hands of international institutions and organizations.' " "The current European unification process is not predominantly about opening up," he continues, "It is about introducing massive regulation and protection, about imposing uniform rules, laws, and policies." It is about a "rush into the European Union which is currently the most visible and the most powerful embodiment of ambition to create something else--supposedly better--than a free society." [Link to full article below:]

March 21, 2005, The Wall Street Journal, By Pete Du Pont, Europe's Problem--and Ours: Will the EU choose collectivism over individualism? Will we?

The Market Center Blog, March 23, 2005


15) Excessive bureaucracy driving business from Miami to Panama

The Wall Street Journal reports on the growing shift of business from Florida to Panama - a shift caused by the hassle of doing business in a post-September 11 environment. Sadly, the virtual absence of cost-benefit analysis ensures that the U.S. will continue to lose business to jurisdictions with a more balanced approach:

[Excerpt from the Wall Street Journal]

Complaints about stepped-up U.S. border scrutiny since the Sept. 11, 2001, terrorist attacks are prompting many Latin American travelers to do more than gripe: They are using places like Panama City's Tocumen International Airport as a regional hub instead of Miami, once the preferred way station for Latin fliers making connections to Europe or North America or even destinations within the region. It is just one way in which Panama is taking advantage of the post-Sept. 11 environment to help itself -- usually at the expense of Miami. ...In October, Spanish carrier Iberia Airlines shut down its Miami hub, which previously ferried travelers between Central America and Europe. Iberia found too many passengers were missing connecting flights, and began flying passengers directly to different destinations in the region on different days. "We were losing money because the new security rules turned what used to be a very good hub into a nightmare," says Jaime Pérez Guerra, an Iberia spokesman in Madrid. To help attract carriers like Iberia, Panama approved a $12 million plan last year to remodel Tocumen Airport and add a second runway. ...Panama's offshore bank sector already has attracted some permanent residents from Miami. After Sept. 11, some banks based in Miami that catered in part to Latinos moved back-office and back-up operating systems to places like Panama to reduce vulnerability. Telecarrier SA, a unit of Grupo Motta, Panama's largest private conglomerate, invested $50 million to lure back-office business from U.S. banks, airlines and retailers. Telecarrier won't divulge its client list, but says nearly a dozen customers recently closed their Miami offices and moved to Panama. Tighter scrutiny of financial flows to the U.S. similarly helped boost deposits in Panamanian banks. Deposits here reached $38 billion last year, mainly from offshore clients... Meanwhile, foreign bank agencies in Miami held $17.1 billion in assets as of September 2004, according to the Florida Department of Financial Services. In September 2000, those banks held $20.6 billion. [Link to full article below:]

March 14, 2005, The Wall Street Journal, By Joel Millman and Evan Pérez, Panama Seeks Miami's Heat: Latin American Nation Lures Banks,,SB111075867925278184,00.html (subscription required)

The Market Center Blog, March 16, 2005


16) Left-wing report attacks low-tax jurisdictions

A leftist group called the Tax Justice Network has issues a report ( arguing that so-called tax havens are evil jurisdictions. As the U.K.-based Guardian reports, low-tax jurisdictions are bad since they deprive governments of money to spend. What the report fails to understand (and the Guardian certainly overlooks) is that much of the capital in the "offshore" world no longer would exist without protection from rapacious governments. This would reduce global economic performance and hurt the people that the left purportedly wants to help:

[Excerpt from the Guardian]

The world's richest individuals have placed $11.5 trillion of assets in offshore havens, mainly as a tax avoidance measure. The shock new figure - 10 times Britain's GDP - is contained in the most authoritative study of the wealth held in offshore accounts ever conducted. The study, by Tax Justice Network, a group of accountants and economists concerned at the escalating wealth held in offshore locations, shows that the world's high-net-worth individuals earn $860 billion each year from their assets. But there is growing alarm among regulators and campaigners because exchequers worldwide are missing out on at least $255bn of tax each year. Governments appear unable, or unwilling, to prevent the rich employing aggressive strategies to minimise their tax liabilities. [Link to full article below:]

March 27, 2005, The Guardian, by Nick Mathiason, Super-rich hide trillions offshore: Study reveals assets 10 times larger than UK GDP, Exchequers deprived of hundreds of billions in tax,11268,1446127,00.html

The Market Center Blog, March 29, 2005


Best regards,

Andrew Quinlan
Center for Freedom and Prosperity


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