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Center for Freedom and Prosperity's E-mail Update 2) CF&P: Senate Tax Bill Raises Taxes on Americans Working Overseas, Harms U.S. Competitiveness 3) Mitchell: International Provisions of Tax Bill Undermine U.S. Competitiveness 7) CF&P Announces A European Tour to Promote Tax Competition 8) OECD threatens world commerce to help high-tax nations pursue an extra-territorial tax agenda. 9) Has the OECD Outlived Its usefulness? 10) CF&P Holds Successful BVI Tax Competition Forum 11) Thatcher's back and gunning for the French 12) EU Constitutional Convention Moving Towards Harmonized Tax Regime 14) Richard Rahn: Legality a la France? 15) Anatole Kaletsky: Capitalism is humanity's most benign creation 16) WSJ Europe: From Four Freedoms To 1,500 Rules 17) CF&P Clips
It has been a busy two weeks since our last update. CF&P had a successful conference in BVI. The private sector is very interested in preserving tax competition and financial privacy. Our next Caribbean conference will be in the Cayman Islands at the end of this month. Former House Majority Leader Dick Armey will be the keynote speaker (more information below). Also, please note that CF&P is pleased to announce a European tour to promote tax competition that Dan Mitchell and Richard Rahn will be participating in over the next two weeks (detail below). CF&P has been very active over the last month meeting with more than 75 Hill and Bush Administration staff members. We have been preaching the need to cut taxes the right way (supply-side tax cuts) and the need to reform our international tax system. The hot issues have been the President's dividend tax cut, corporate inversions, individual expatriation, Section 911 (the foolish idea of raising taxes on U.S. workers overseas), tax treatment of reinsurance, and the IRS's interest reporting regulation on non-resident aliens. We hope to win some of these battles and limit the damage on others. Make sure you checkout other stories below on the OECD's new attack on international shipping and the EU's continued attempt to harmonize income taxes. Also, Rep. Jeb Hensarling of Texas and 12 of his first-term Republican colleagues sent a letter to Treasury Secretary John Snow urging the withdrawal of the IRS's interest reporting rule. This is a very exciting/hectic time in Washington and the Center is playing an important role. Two years ago, before CF&P started the Coalition for Tax Competition, it was nearly
impossible for Hill staffers to get timely answers to some of these important international tax questions.
We are pleased with this outcome; however, we have a long ways to go to meet our goals. Therefore, if you would like to help support some of our activities please visit our online support section for more information on how to help. Thank you.
Kind regards, AQ
2) CF&P: Senate Tax Bill Raises Taxes on Americans Working Overseas, Harms U.S. Competitiveness [Excerpt from press release] Washington, DC (May 13, 2003) – The Center for Freedom and Prosperity today criticized the Senate Finance Committee for raising taxes on Americans who live and work overseas. By eliminating the so-called "Section 911 exclusion," the Finance Committee tax bill will force many Americans to pay a second layer of tax to the IRS on incomes under $80,000 – even though that income is earned – and subject to tax – in other nations. Andrew F. Quinlan, President of the Center, stated that, "It is bad policy to tax Americans who live and work overseas. Unfortunately, instead of fixing the problem by protecting all
overseas income from double-taxation, the Senate Finance Committee has made the tax code less competitive by eliminating the protections afforded by Section 911." [Link to full press release below:] Section 911 News Clips: May 9, 2003, Congressman Mark Foley Blasts Senate Republican Tax Hikes May 13, 2003, The Royal Gazette, By Mairi Mallon, Island could face exodus of US companies if tax bill becomes law, warns expert May 12, 2003, The Royal Gazette, By Mairi Mallon, US bill takes aim at foreign tax breaks May 6, 2003, The Wall Street Journal (Asia), Yankee, Go Home May 9, 2003, Expatica News, US expats may face tax rise May 8, 2003, Bloomberg News, By Jeff Bliss, Senate Republicans May Drop Foreign Tax Exemption May 8, 2003, Bloomberg News, By Ryan J. Donmoyer and Jeff Bliss, U.S. Senate Finance Panel Approves $412 Billion Tax Cut Plan May 8, 2003, USA Today, By Richard Benedetto and William M. Welch, Support for Bush tax cuts growing May 6, 2003, The Economic Times, By Prasenjit Bhattacharya & James Mathew, Expat Americans may lose tax breaks at home April 30, 2003, USA Today, By William M. Welch, Tax-cut idea could make Americans abroad pay more
3) Mitchell: International Provisions of Tax Bill Undermine U.S. Competitiveness [Excerpt] The Senate Finance Committee tax bill contains a number of provisions that would undermine American competitiveness and restrict fundamental rights of labor and capital to cross national borders. If approved, these provisions will undermine the parts of the tax bill--such as the acceleration of marginal tax rate reductions and small-business expensing--that promote economic growth. Three provisions are particularly damaging. 1) Raising Taxes on Americans Working Abroad; 2) Punishing Corporate Inversions; and, 3) Heavy Exit Taxes on American Residents Who Emigrate. May 12, 2003, The Heritage Foundation Executive Memorandum, by Daniel J. Mitchell, Ph.D., International Provisions of Tax Bill Undermine U.S. Competitiveness
4) 13 GOP Freshmen Ask Treasury Secretary Snow to Permanently Withdraw IRS's Interest Reporting Regulation Texas Republican Congressman Jeb Hensarling and 12 other GOP first-term Members of the House of Representatives sent a letter to Treasury Secretary John Snow expressing their "strong opposition to an IRS regulation (REG-133254-02) to require the reporting of deposit interest paid to foreigners who invest their money in U.S. banks." List of the 13 Members: Jeb Hensarling (R-TX), Katherine Harris (R-FL), John Carter (R-TX), Tom Feeney (R-FL), Chris Chocola (R-IN), Tim Murphy (R-PA), Bob Beauprez (R-CO), Jon Porter (R-NV), Tom Cole (R-OK), Trent Franks (R-AZ), Michael Burgess (R-TX), Rob Bishop (R-UT), and Stevan Pearce (R-NM) Link to letter: May 12, 2003, Tax-News.com, by Mike Godfrey, More Congressmen Criticise IRS Bank Interest Reporting Rules
5) CF&P: Treasury Official Misrepresents Clinton-Era IRS Regulation in Testimony to Small Business Committee [Excerpt] Washington, DC (May 1, 2003) Leading taxpayer activists today criticized Pam Olson, the Treasury Department's Assistant Secretary for Tax Policy, for inaccurate testimony to the House Small
Business Committee. Specifically, Ms. Olson made several incorrect assertions about a Clinton-era proposed IRS regulation that would require financial institutions to report deposit interest paid to nonresident
aliens. Link to full statement below:
6) Former House Majority Leader Dick Armey and CF&P's Andrew Quinlan will Speak at Second Annual Cayman Islands Chamber of Commerce Economic Forum Friday, May 30th, Former House Majority Leader Dick Armey and CF&P's Andrew Quinlan will speak in the Cayman Islands on tax competition, financial privacy and fiscal sovereignty with a Washington perspective. Dick Armey, former Majority Leader of the United States House of Representatives, will deliver the keynote address at the second annual Cayman Islands Chamber of Commerce Economic Forum and discuss the topic "Tax Reduction, Tax Reform and Tax Competition: Agenda for Growth." Andrew Quinlan, President of the Center for Freedom and Prosperity Foundation, will discuss the campaign in the United States to promote tax competition on Capitol Hill and in the Bush Administration. Veronique de Rugy, Fiscal Policy Analyst for the Cato Institute, will discuss tax competition and why high tax European countries are pushing to harmonize taxes at the expense of the Cayman Islands and other low tax countries. Ms. de Rugy will also explain what we can do to fight them. Richard Rahn, Discovery Institute senior fellow, will speak on the link between pro-growth tax policy and a civil society. If you would like to attend, please visit:
7) CF&P Announces A European Tour to Promote Tax Competition Dan Mitchell of the Heritage Foundation and Richard Rahn of the Discovery Institute will participate in a wide-ranging tour of major European cities to promote tax competition and tax reform. Between May 18 and May 24, they will travel to Brussels, Vienna, Bratislava, Zurich, Bern, St. Gallen, and Milan. Not all of their events will be open to the public. If you are interested in finding out more about their speaking engagements - or if you would like to meet with them while they are in one of the cities mentioned above, please contact Dan at dan.mitchell@heritage.org.
8) OECD threatens world commerce to help high-tax nations pursue an extra-territorial tax agenda. International shipping is a well-functioning aspect of world commerce, in large part because "open registry" jurisdictions help maintain good standards and control costs. But high-tax jurisdictions are willing to disrupt this vital aspect of global trade in hopes of tracking income and assets outside their borders. Not surprisingly, bureaucrats at the OECD are acting as lap dogs for the European welfare states that are pushing this misguided agenda. The OECD has re-launched their campaign against business-friendly jurisdictions that attract significant amounts of ship registration business. Followers of the OECD's dishonest tactics will not be surprised to find that the Paris-based bureaucrats are trying to disguise their imperialist agenda as part of the war on terror. See article below for more information. April 30, 2003, Reuters, By Jon Boyle, OECD-shipowning secrecy poses "maritime 9/11" risk
9) Has the OECD Outlived Its usefulness? [Excerpt] For the man in the street, OECD is just another of those irritating sets of initials that the world seems so full of these days. Readers of the business pages may know, at least, that those initials stand for the Organisation for Economic Cooperation and Development. They may even have some idea that the OECD has something to do with the world economy. But as the organisation gathers the economic jetset this week in Paris, a lot of the talk on the fringes of the conference is about what that "something" is supposed to be. [Link to full article below:] April 30, 2003, BBC News, By James Arnold, What is the OECD for? Other OECD articles: May 12, 2003, The Nassau Guardian, An update on the OECD harmful tax project
10) CF&P Holds Successful BVI Tax Competition Forum The Center for Freedom and Prosperity seminar attracted a significant crowd, including both government officials and private sector representatives from the financial services industry. Andrew Quinlan, President of the Center for Freedom and Prosperity, provided a brief overview of tax competition issues. Quinlan said, "The Speakers today will discuss the latest developments in the global battle between those that favor tax competition and those that want to create fiscal cartels. Experts from both the United States and the Bahamas will analyze how tax competition promotes economic development and explain how tax harmonization schemes are a threat to fundamental human rights. We will also answer questions on the BVI's new budget." Dan Mitchell of the Heritage Foundation discussed the battle against OECD and European Union tax harmonization schemes, and explained the discriminatory treatment of jurisdictions such as the BVI. "Tax Harmonization is bad news for all financial institutions. It seems that the OECD and EU want financial institutions to act as deputy tax collectors instead of profit-making institutions that help allocate capital and boost prosperity. BVI and other low-tax jurisdictions need to keep this in mind when the enact changes to their laws," Mitchell said. [Dan's PowerPoint Presentation is linked below.] Joel Mowbray of National Review discussed the benefits of tax competition and reviewed the Center's Washington campaign to protect the interests of all low-tax jurisdictions. Mowbray said, "Most political debates are won or lost before they even begin. The key is how the debate is framed. The media obviously plays a key role in this, and Big Media such as the New York Times and Washington Post have labeled 'tax competition' as 'tax havens' & 'tax shelters.'" Last but not least, Gilbert Morris of the Bahamas-based Landfall Centre warned the BVI of the adverse consequences that will occur if the government acquiesces to the OECD. Citing the negative impact on the Bahamas economy, Dr. Morris said "The international bureaucracies will keep moving the goal posts until low-tax governments have surrendered their fiscal sovereignty." Link to Dan Mitchell's PowerPoint Presentation:
11) Thatcher's back and gunning for the French [Excerpt] BARONESS Thatcher returned to politics last night with an attack on the French, whom she accused of collaborating with "enemies of the West" for short-term gain. In a one-off comeback speech in New York, which broke a medical ban on speaking in public, the former Conservative Prime Minister attacked those who use environmentalism, feminism and human rights campaigns to fight capitalism and the nation state. She praised Tony Blair, but above all President Bush, for overriding the "rot" that "paralysed" the United Nations. [Link to full article below:] May 15, 2003, The Times (London), By David Charter, Thatcher's back and gunning for the French
12) EU Constitutional Convention Moving Towards Harmonized Tax Regime As might have been expected, the EU's constitutional convention under the leadership of ex-French President Valery Giscard d'Estaing is moving towards a proposal that the national veto on tax should be scrapped. Giscard's position, like that of most European federalists under the slogan of 'ever closer union', is that in a Union of 25 members there will never be a coherent, unitary Europe if such an important policy aspect as tax is left to be batted around like a football between competing member states. That is no doubt true; the problem in the eyes of countries like Ireland and the UK is that the social model which France and Germany would like to impose on Europe is essentially uncompetitive. So they see Giscard's plans as being simply an attempt to prevent lower-taxing states from competing 'unfairly' within the European super-state. May 6, 2003, Tax-News.com, by Ulrika Lomas, EU Constitutional Convention Moving Towards Harmonised Tax Regime Additional EU articles: May 12, 2003, Nzoom.com, EU choir sings for tax harmony May 6, 2003, Tax-News.com, by Jason Gorringe, Jersey Considers Options On EU Savings Tax
[Excerpt] Someone owes Stanley Works an apology. Last year, Connecticut politicians and the AFL-CIO shamed the tool and hardware company out of reincorporating in Bermuda so it could save $30 million in corporate income taxes. Attorney General Richard Blumenthal and GOP Congresswoman Nancy Johnson will no doubt now want to take some responsibility for the company's decision this week to lay off 1,000 workers and close nine facilities. May 9, 2003, The Wall Street Journal, REVIEW & OUTLOOK: Sorry, Stanley
14) Richard Rahn: Legality a la France? [Excerpt] What's the difference between America and France? In America everything is legal except what is explicitly prohibited, and in France everything is illegal except what is explicitly allowed. This old line is no longer as funny as it used to be, as America's legal system grows increasingly to look like the French. America has been blessed with the English common law system, or customary law based largely on precedent and statutes in effect in England under James I in 1603. Many of the former English Colonies adopted the common law system. Continental Europe, on the other-hand, and many other countries adopted a civil law system based on detailed written codes. The civil law system traces its origins to the ancient Roman law system. The most famous of these civil law systems is the "Code Napoleon" of 1804, which serves as the basis for modern French law. It is widely recognized that the "rule of law" is necessary for a civil and prosperous society. But in order to have a "rule of law," people need to know what the law is and for the laws to be considered reasonable. The Ten Commandments are an example of this principle. Most everyone could memorize 10 rules, but no person can know 10,000 or 100,000 rules. The beauty of the traditional common law system was there were relatively few rules, and the subsequent development of the law was based on the commonly understood first principles. Thou shall not murder, steal, etc. [Link to full article below:] May 2, 2003, The Washington Times, by Richard W. Rahn, Legality a la France? Additional column by Richard Rahn: May 8, 2003, The Washington Times, by Richard W. Rahn, Want a free lunch?
15) Anatole Kaletsky: Capitalism is humanity's most benign creation [Excerpt] Today is May 1, the International Day of Labour. It seems appropriate, therefore, to devote this column to the triumph of global capitalism. For if there is one social principle on which all economists, historians and politicians must now surely agree, it is that capitalism has done more than any other human construct to benefit working people around the world. Even if there were room for argument about the benefits of free trade and free markets to workers in advanced industrial countries — and there really cannot be, if we compare what has happened to ordinary people's lives in Western and Eastern Europe, not to mention in North and South Korea, during the 50 years since the Second World War — the principle that global capitalism is the most benign and successful of all human creations would be firmly established by the social progress in China since its integration into the global economy. [Link to full article below] May 1, 2003, Times Online (London), by Anatole Kaletsky, Capitalism is humanity's most benign creation
16) WSJ Europe: From Four Freedoms To 1,500 Rules [Excerpt] The European Union's one shining, unequivocal success, aside from 60 years of peace, is surely the single market that stretches from Portugal in the west to Germany in the east. So we have always taken a particular interest in European Commissioner Frits Bolkestein's semiannual Scorecard of progress in breaking down the barriers to the exercise of the EU's "four freedoms" -- free movement of capital, people, goods and services. The latest installment came out this week. The bad news is that many member states have been backsliding in the last year in bringing their laws into line with the requirements of the Single Market. The other bit of bad news is that the number of regulations underpinning the Single Market continues to grow. Some 200 new directives have issued from Brussels in the name of the four freedoms since the commission started keeping score six years ago; they now number over 1,500. Put the two together, and a picture emerges in which the regulators are out-running the ability of member states to effect these rules. [Link to full article:] May 8, 2003, The Wall Street Journal (Europe), From Four Freedoms To 1,500 Rules
May 12, 2003, WorldNetDaily.com, by Pat Buchanan, When the right was right May 12, 2003, Forbes.com, by Neil Weinberg, Criminalizing Capitalism: Politicians are punishing Wall Street to avenge a stock market gone sour. Main Street and small investors will be among the unintended victims.
May 12, 2003, The Associated Press, By Martin Crutsinger, Sources: U.S. to Bring Case Against EU May 11, 2003, Reuters, By Elif Kaban Report: Swiss Private Banks a Dying Breed May 8, 2003, Tax-News.com, by Amanda Banks, Cayman Delegation Discuss Regulatory Issues In Washington May 8, 2003, Tax-News.com, by Jason Gorringe, Jersey Business Braces Itself For Increasing Scrutiny From IR May 7, 2003, Fox News, Libraries Rally Against USA Patriot Act May 7, 2003, CNN News, EU cleared for U.S. trade battle May 6, 2003, By Paul Craig Roberts, "The Rights Of Englishmen" – The Wrongs Of American Prosecutors May 6, 2003, The Washington Times, By Bill Gertz, France helped Iraqis escape May 5, 2003, The Telegraph (London), UK's tax lead under threat April 12, 2002, Cato Institute, by Veronique de Rugy, The Latest IRS Scare Campaign
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