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Center for Freedom and Prosperity's E-mail Update 1) CF&P's Visit Very Timely: May 5 Seminar to Address Impact of New Laws on BVI Economy 4) CF&P Efforts Recognized in Law Journal 5) De Rugy: Corporate Inversions Why They Happen 6) Stanley Works to Cut 1,000 Jobs, Close 9 Facilities 7) Mitchell: Right kind of tax cut 8) Hans Labohm: Sick Man Is Europe 9) 3rd Annual International Tax Planning Anti - Money Laundering Compliance Conference 10) Greenspan: On The Reagan Legacy 11) Harvard Business School: Sharing The Spoils: Taxing International Human Capital Flows
1) CF&P's Visit Very Timely: May 5 Seminar to Address Impact of New Laws on BVI Economy The government of the British Virgin Islands is considering major changes to the laws governing financial services. These amendments, some of which appear driven by a desire to appease the OECD and other foreign bureaucracies, could have a substantial impact on the BVI economy. As the world's leading defender of tax competition, financial privacy, and fiscal sovereignty, the Center for Freedom and Prosperity is ideally situated to analyze the potential economic impact of these new policies. Participants in the May 5 seminar have agreed, in addition to their general comments, to also discuss the possible consequences for the local economy if the new laws are enacted. Seminar: Monday, May 5th, 2003, 4 P.M. to 6:00 PM Link below to more information on the seminar: New Clips: April 22, 2003, Tax-News.com, Seminar To Analyze BVI's Legislative Plans
2) Sweeney Legislation Protects America's Economy: International Bureaucracies Will Lose U.S. Subsidy if They Support Anti-American Economic and Tax Policies In March, New York Congressman and House Appropriation Committee member John Sweeney introduced legislation (H.R. 1206) to discourage international organizations from promoting tax harmonization policies that undermine the economic interests of the United States. The legislation targets two organizations, the United Nations and the Paris-based Organization for Economic Cooperation and Development (OECD), both of which receive about 25 percent of their budgets from U.S. taxpayers. Andrew Quinlan, president of the Center for Freedom and Prosperity, welcomed the legislation: "Rep. Sweeney's bill is a shot across the bow to multinational bureaucracies. They will
suffer consequences if they take America's money and then use those funds to push policies that undermine our competitiveness and sovereignty. The Center for Freedom and Prosperity and the Coalition for Tax
Competition strongly support H.R. 1206." [Link to full release and legislation below:] H.R. 1206: Prohibition on United Nations Taxation Act of 2003 April 18, 2003, LawAndTax-News.com, by Mike Godfrey, CFP Welcomes Sweeney Tax Legislation
3) CF&P Foundation Study Explains that Government Intervention Undermines Sound Corporate Governance: Markets, not regulation, best way to monitor executive behavior The Center for Freedom and Prosperity Foundation released a study showing that corporate scandals often are the result of misguided government policies. Andrew F. Quinlan, President of the Center for Freedom and Prosperity, remarked, "Many laws reduce incentives to use company funds in an economically efficient manner, so it should come as no surprise when company managers don't make wise choices." Quinlan added, "We should punish executives that break the law and act in an unethical fashion, but policy makers also should address the misguided laws and regulations that make bad behavior more attractive." The report, entitled Markets, Morality, and Corporate Governance: A Look Behind the Scandals," is written by Heritage Foundation tax expert Daniel J. Mitchell. In the study, Mitchell specifically reviews how tax law, bankruptcy law, contracting law, and takeover law influence executive decision-making. Mitchell has particularly harsh words for tax policy, stating "The double-taxation of dividends undermines the incentives of both managers and investors to make good choices, which is one of the reasons why President Bush's tax plan is so desirable." Link to full press release and Prosperitas below: Press Release: April 2003, Prosperitas (Volume III, Issue II): Markets, Morality, and Corporate Governance: A Look Behind the Scandals, by Daniel J. Mitchell
4) CF&P Efforts Recognized in Law Journal In an interesting paper on the potential tax consequences of outer space commerce, Bill Andrews goes into great detail on the formation of CF&P and how our early battles with the OECD changed the course of history. Bill's paper brings back many fond memories and we look forward to making many more in our continued campaign to protect tax competition, financial privacy and fiscal sovereignty. Link to full report below: Volume 1, 2003, Regent Journal of International Law, By William Lee Andrews, III, A Mighty Stone for David's Sling: The International Space Company
5) De Rugy: Corporate Inversions Why They Happen The Bermuda newspaper, The Royal Gazette, opines on the Stanley Works' lay-offs and uses Cato Institutes, and CF&P board member, Veronique de Rugy's PowerPoint presentation on "Corporate Inversions Why They Happen" to explain the pros and cons of corporate inversions. More specifically, de Rugy states that inversions are a direct response to overburdened tax policies imposed by the United States, which has the effect of retarding the competitiveness of its own home grown global corporations. [Excerpt] As an update to the column I wrote about Bermuda not being a tax haven, I thought it would be interesting to note that Stanley Works recently announced that it was going to eliminate 1000 jobs and close four plants and five warehouses to cut costs. The cost to the United States taxpayer is $60 million! Compare that to Stanley Works' desire to invert its headquarters to Bermuda to save $30 million in taxes last year. The arithmetic does not add up. So for groups like the Bermuda Project Team and the politicians who are pushing for 'patriotism' over cost savings in the worst economy since the Great Depression, I wonder if they will now help those 1000 workers who lost their jobs to find new jobs. Koshea Scott, Bermuda Crown Counsel, sent me a very insightful website talking all about the pros and cons of corporate inversions, www.cato.org/events/transcripts/020626-derugy.ppt. The website points out the pros and cons of corporate inversions but more specifically states that inversions are a direct response to overburdened tax policies imposed by the United States which has the effect of retarding the competitiveness of its own home grown global corporations. Inversions are a necessary means for large United States domiciled companies to remain competitive with their foreign competitors who are not taxed on worldwide income as are all United States based companies. Link to article below: April 30, 2003, The Royal Gazette, by Cathy Duffy, Bermuda – an island without boundaries Veronique de Rugy's PowerPoint presentation on "Corporate Inversions Why the Happen." Additional Inversion Clips: April 17. 2003, The Royal Gazette, By Becky Ausenda, Bermuda – a prop for US manufacturing base April 17, 2003, Tax-News.com, by Mike Godfrey, Bermuda Attracts More Unwelcome Attention In US Tax Debate April 11, 2003, Tax-News.com, by Leroy Baker, US Television Ad Attacks Firms Reincorporating Offshore
6) Stanley Works to Cut 1,000 Jobs, Close 9 Facilities Unfortunately, the demagogy of the left has cost 1,000 Americans jobs and untold tax dollars. This was an obvious move by Stanley to stay competitive (CF&P predicted this would happen this summer, see link below). [Excerpt] New Britain, Connecticut, April 9 (Bloomberg) -- Stanley Works, the largest U.S. maker of hand tools, will fire 1,000 workers and close plants and warehouses after first-quarter profit fell. The company's shares dropped as much as 12 percent. The job cuts, which will shrink the workforce by about 6.7 percent, and closings will cost about $60 million before taxes this year, the company said in a statement. Stanley has been cutting expenses after failing to change its legal address to Bermuda to save on taxes. [Link to full article below] April 9, 2003, Bloomberg, By Delbert Ellerton, Stanley Works to Cut 1,000 Jobs, Close 9 Facilities CF&P's statement issued after Stanley decided not to move its corporate charter to Bermuda to save U.S. jobs:
7) Mitchell: Right kind of tax cut [Excerpt] Listening to Washington policy-makers haggle over the size of President Bush's proposed tax cut — $350 billion over the next decade? $550 billion? $726 billion? — you would think nothing matters much beyond the price tag. Just as important, though, is the type of tax cut that is adopted. Not all tax cuts are created equal. The wrong kind will do little to boost economic growth and create jobs. Providing a $500 annual "rebate" to every taxpayer in the country, for instance, would reduce tax revenue significantly. But it would not help the economy because rebates don't change incentives to work, save and invest. By contrast, eliminating — or even reducing — the "double taxation" of dividends would encourage more investment and boost the economy's performance, even though the amount of tax relief might be small compared with a universal rebate. When designing the tax cut, lawmakers should consider the following questions: [Link to article below:] April 27, 2003, The Washington Times, by Daniel Mitchell, Right kind of tax cut Additional Articles on the Bush Tax Cuts and Economic Growth April 24, 2003, The Washington Times, by Richard Rahn, Bolder strokes April 18, 2003, The Washington Times, by Richard W. Rahn, Reality lapses April 15, 2003, The Washington Times, by Daniel J. Mitchell, Russia -- leading the way April 4, 2003, The Washington Times, by Richard W. Rahn, Tax cut facts and fantasies
8) Hans Labohm: Sick Man Is Europe [Excerpt] Despite a lot of rhetoric to the contrary Europe has not ceased to labour under persistent Eurosclerosis. Back in the seventies, it was the Swedish economist Assar Lindbeck, who coined the notion 'socioeconomic arteriosclerosis'. In the eighties, because of the fact that this phenomenon was more widespread in Europe than elsewhere in the developed world, the German economist Herbert Giersch gave it a European twist and came up with 'Eurosclerosis'. This form of sclerosis refers to the growing ossification of national economic systems, which was first analysed by the American economist Mancur Olson. It is a form of old-age disease of long-term stable economies. It manifests itself in many forms of government intrusion into the economy, which have all in common that they encroach upon the proper functioning of markets. One example is the advent of special interest groups. The latter are acting as distributional coalitions, i.e. to receive special favours from the government in the form of protection, subsidies, monopolistic status, or other forms of barriers to exit and entry in a particular industry. If successful, their actions turn market participants into rent-seekers, thus stifling economic dynamism and growth. The remedy is to improve the supply side of the economy, as opposed to the demand side, which was the main focus of Keynesianism. Supply side economics is aimed at unleashing market forces in order to foster structural adjustment, mobility, flexibility, dynamism and innovation. [Link to full article below:] April 24, 2003, Tech Central Station Europe, by Hans Labohm, Sick Man Is Europe
9) 3rd Annual International Tax Planning Anti - Money Laundering Compliance Conference A major world offshore tax competition, tax planning, financial privacy, anti-money laundering and banking compliance conference for will be held, June 04 - 06, 2003, Grand Cayman Marriott Beach Resort, with over 50 speakers from 19 countries. Many of the experts that the Center relies on for expert research and advise will be participating in the conference. Dan Mitchell from the Heritage Foundation is scheduled to present at the conference, For information and reservations click here:
10) Greenspan: On The Reagan Legacy [Excerpt] Our forefathers bestowed upon us a system of government and a culture of enterprise that has propelled the United States to the greatest prosperity the world has ever known. We elect Presidents to protect and expand that bequest. Ronald Reagan will go down in history as one President who superbly fulfilled that obligation. Contributing far more to that success than most realize was Nancy Reagan. The critical importance of her loving support of her husband, especially in periods of great stress, was evident to all of us who had the privilege of serving the President. And besides, she added a certain sparkle to the Reagan White House and to Washington that few of us can forget. I particularly remember her bravura surprise performance to a standing ovation at the 1982 Gridiron Club dinner. I do not know how many congressional votes she garnered for the Administration from that performance, but she certainly won mine. The Reagan presidency was a remarkable one for Americans. In the words of the nation's fortieth President, "We meant to change a nation, and instead, we changed the world." [Below is a link to his full remarks:] April 9, 2003, Remarks by Federal Reserve Board Chairman Alan Greenspan at the Ronald Reagan Library, Simi Valley, California, The Reagan Legacy
11) Harvard Business School: Sharing The Spoils: Taxing International Human Capital Flows This paper argues that cross-border human capital flows from developing countries to developed countries over the next half-century will demand a new set of policy responses from developing countries. The paper examines the forces that are making immigration policies more skill-focused, the effect of both flows (emigration) and stocks (diasporas) on the source countries, and the range of taxation instruments available to source countries to manage the consequences of those flows. This paper emphasizes the example of India, a large source country for human capital flows, and the United States, an important destination for these human capital flows and an example of how a country can tax its citizens abroad. In combination, these examples point to the significant advantage to developing countries of potential tax schemes for managing the flows and stocks of citizens who reside abroad. Finally, this paper concludes with a research agenda for the many questions raised by the prospect of large flows of skilled workers and the policy alternatives, including tax instruments, available to source countries. [Link to full study below:] September 2001, Harvard Business School, Sharing The Spoils: Taxing International Human Capital Flows, by Mihir A. Desai, Devesh Kapur & John McHale
May 1, 2003, The Times Online (London), by Anatole Kaletsky, Capitalism is humanity's most benign creation April 29, 2003, Investors Offshore.com, by Carla Johnson, International Business Companies (Amendment) Act 2003 Enacted In BVI April 29 , 2003, The Nassau Guardian, by Lindsay Thompson, Red tape 'stifling' investment: Govt set to overhaul 'hurried' finance laws April 29, 2003. Reuters, C/Net, News.com, Infeneon mulls leaving Germany. April 28, 2003, The Von Mises Institute, by Karen de Coster, Will Liechtenstein's Autonomy Prevail? April 28, 2003, Dallas Morning News, by Anuradha Raghunathan, Private banking continues to grow April 27, 2003, The Jamaica Observer, Eastern Caribbean states agree to economic union, common passport April 24, 2004, BBC News, By Hugh Schofield, Elf trial reveals moral vacuum April 22, 2003, The Nassau Guardian, Deepen capital markets April 21, 2003, Cato Institute, by Benjamin Powell, Markets Created a Pot of Gold in Ireland April 15, 2003, The Nassau Guardian, Are we there yet?: No quick fixes likely for Bahamian economy April 15, 2003, The American Enterprise Online, By Fred Gedrich, Don't Trust the U.N.: It has always failed at nation building. April 15, 2003, Tax-News.com, by Jason Gorringe, Gordon Brown May Back Off Changing Non-Domicile Tax Status April 14, 2003, BBC News, US tax sleuths 'in a shambles' April 8, 2003, Guardian Unlimited, IRS Money Woes Strain Tax Enforcement
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