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Dear Friends, Below is an op-ed from yesterday's European Wall Street Journal discussing the recent announcement that the Bush Administration has wisely decided not to support the European Unions "savings tax directive." A Treasury spokesperson also reaffirmed that Secretary O'Neill has "made clear that the U.S. has no interest in participating in any effort toward tax harmonization and that protection of the confidentiality of taxpayer information is paramount." This is additional good news. To be sure, the Administration is not completely solid on the issue. Some IRS and Treasury bureaucrats are sympathetic to Europe's welfare states and are trying to sabotage President Bush's economic team. That is why it is particularly revealing that a Treasury spokesperson "declined comment on the assertions made by CFP that a highly placed White House official said the directive has no support in the administration." Translated from Washington-speak to plain English, this is an admission that supporters of tax competition prevailed. In the near future, the U.S. Government will officially inform the European Union bureaucrats of the White Houses decision. We can only hope the bureaucrats at Treasury will not undermine Administration policy. Over the next several weeks, we'll be keeping an eye on things here in Washington. Best regards, Andrew Quinlan Center for Freedom and Prosperity Special Update 1) WSJ-E: Mitchell & Quinlan -- The End of Europe's Savings-Tax Cartel 1) WSJ-E: Mitchell & Quinlan -- The End of Europe's Savings-Tax Cartel The Bush administration has decided not to participate in the European Union's "Savings Tax Directive." This is the final nail in the coffin for the proposal, which would have required financial institutions in low-tax jurisdictions to collect information on nonresident investors and share that confidential data with tax authorities in other nations. This good news has been confirmed to us by several senior White House officials. . . . . . The U.S. decision will be greeted with sighs of relief in many other nations. Britain, Luxembourg, Belgium, and Austria correctly view the directive as a threat to their financial-service sectors. Indeed, those governments originally refused to let the directive go forward unless six non-EU jurisdictions, including Switzerland and the United States, agreed to join the cartel. They assumed, quite correctly, that either Switzerland or the U.S. would veto the directive. Many free-market groups, think tanks, and taxpayer organizations in the United States led the fight to reject the Savings Tax Directive. But their efforts were not motivated by a desire to protect America's national interests. Instead, the Savings Tax Directive was viewed as fundamentally inconsistent with good tax policy. Had it been implemented, it would have crippled tax reform and undermined the liberalizing process of tax competition. [Link to full article below:] July 25, 2002, The Wall Street Journal - Europe, by Daniel Mitchell and Andrew Quinlan, The End of Europe's Savings-Tax Cartel
2) WSJ-E: Editorial -- American Unilateralism Exists . . . [A]s Daniel Mitchell and Andrew Quinlan note nearby, the Bush administration is prepared to thumb its nose as well at the EU's Savings Tax Directive, which attempts to make tax collecting a multilateral effort. Mr. Quinlan's Center for Freedom and Prosperity, a Washington, D.C., based advocacy group, cites a highly placed White House official as saying the U.S. will not sign the directive, which is a broad attack on personal financial privacy for the sake of rooting out a few suspected tax evaders. Since the EU made implementation of the directive dependent on six non-EU countries, some of which still value financial privacy, the Bush administration had the power to put it on hold, and it appears that it has. [Link to full editorial below:] July 25, 2002, The Wall Street Journal - Europe , Editorial, American Unilateralism Exists
3) BNA: Treasury, EU Still in Contact on Savings Tax; Interest Group Asserts White House Rejection The Center for Freedom and Prosperity July 24 said it was told by "several senior Bush administration sources" July 23 that the United States has no plans to sign the EU directive, which calls for detailed information exchanges between countries on the financial activities of nonresidents. Treasury spokeswoman Tara Bradshaw issued a statement saying the administration has "only had technical discussions about some specifics of the proposal at the staff level." She declined comment on the assertions made by CFP that a highly placed White House official said the directive has no support in the administration. While Treasury Secretary Paul O'Neill sees information exchange agreements as a priority, Bradshaw said, O'Neill also has "made clear that the U.S. has no interest in participating in any effort toward tax harmonization and that protection of the confidentiality of taxpayer information is paramount." [Link to full article below:] July 25, 2002, The Bureau of National Affairs, Treasury, EU Still in Contact on Savings Tax; Interest Group Asserts White House Rejection
July 25, 2002, Tax-News.com, CFP Says EU Savings Directive Is Dead July 26, 2002, The Independent (London), Outlook: A taxing matter the Bush Administration can ill afford to can
July 24, 2002, CFP Hails Death of EU Savings Tax Directive: Bush Administration Rejects Tax Cartel
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