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Center for Freedom and Prosperity's E-mail Update 2) CF&P Hails Death of EU Savings Tax Directive; Bush Administration Rejects Tax Cartel 3) WSJ-E: Mitchell & Quinlan -- The End of Europe's Savings-Tax Cartel 6) Bill Thomas Warns O'Neill of EU's Tax Cartel; Questions Wisdom of Clinton-Era IRS Reg 7) Mitchell Condemns OECD scheme in Foreign Policy. 8) NTU's Eric V. Schlecht: Bringing Us All Down -- The Europeans want to sink global tax competition 9) Mitchell applauds Ways & Means Chairman for trying to reduce tax bias against US multinationals 11) California's Treasurer Grandstands and Hurts California's Consumers 13) Former Congressman Bob Bauman on the "Faceless Bureaucrats" working against America's best interests 14) Nat Hentoff: Rescued by Dick Armey from Big Brother 15) Jansen: Will New Treasury Rules Prove to be an Enabler of Privacy Invaders? 16) CF&P Clips
We received great news when the Bush Administration decided not to support the European Union's "savings tax directive." Several sources from a meeting held on July 19 told us that the U.S. would not participate in the proposed cartel. A Treasury press aide, "declined comment on the assertions made by CF&P 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. We are currently waiting for the public announcement by the Administration. On the other hand, we received some bad news when the IRS resuscitated a discredited Clinton-Era proposal to inform on non-resident aliens who invest in U.S. bank accounts. The regulation was slightly modified – the IRS now is only seeking information on residents from 16 nations, but it is widely understood that the IRS will seek further reporting if this proposed regulation is implemented. This policy of informing on foreign investors is bad for America's economy. We believe that it is not in the U.S.'s interest to scare foreign investors, especially when the economy is sluggish. The Center will be promoting an aggressive grassroots campaign to kill the regulation over the next few months. We plan on testifying at the IRS hearing and we will meet with many Members of Congress and several Bush Administration officials to express our concerns. We also discuss the corporate inversion issue, condemning the protectionist measures put forth in Congress to "punish" companies looking to compete on a level playing field. Firms should be able to protect U.S. shareholders, workers and consumers by getting out from under the anti-competitive international tax code. We also have an extended news clip section packed with many worthwhile articles to peruse.
2) CF&P Hails Death of EU Savings Tax Directive; Bush Administration Rejects Tax Cartel [Excerpt for press release below:] According to one highly placed White House official, "We are not signing the European Union's 'savings tax directive.' There is ZERO support in the Administration for signing." This is the death blow to the EU's proposal since it is based on unanimous participation of 21 targeted nations. "I am very pleased that the hard work of the Center for Freedom and Prosperity has yielded dividends for the world's taxpayers," said Andrew F. Quinlan, President of the Washington, DC based Center for Freedom and Prosperity. "CF&P has been lobbying against tax cartels since October 2000, and defeat of the EU savings tax directive was our number one priority." Quinlan added, "This decision is a victory for tax competition, financial privacy and fiscal sovereignty." The European Union "savings tax directive" would have required financial institutions in low-tax nations to report private financial information about nonresident investors so high-tax
nations could tax income earned in other jurisdictions. In addition to the 15 EU nations, six non-EU nations were being asked to participate – including the United States and Switzerland. [Link to full press release
below:] Press reports: August 1, 2002, International Money Marketing, EU savings tax directive "dead", say US groups July 25, 2002, The Wall Street Journal - Europe , Editorial, American Unilateralism Exists 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 29, 2002, Swiss Info, Pressure eases on banking secrecy as EU tax plan unravels July 26, 2002, The Independent (London), Outlook: A taxing matter the Bush Administration can ill afford to can Other EU articles: July 31 2002, The Financial Times, By George Parker and Francesco Guerrera, Accounting controls on EU budget 'unreliable' July 17, 2002, Tax-News.com, by Mike Godfrey, Mitchell Argues Against EU Savings Tax Directive, For Flat Tax July 15, 2002, Tax-News.com, by Ulrika Lomas, Savings Tax Directive Doomed Unless Swiss Cooperate, Says EU Presidency July 11, 2002, Tax-News.com, by Amanda Banks, Cayman Media Warns On EU Savings Tax Directive July 11, 2002, Tax-News.com, by Mike Godfrey, Washington Foundation Attacks EU Tax Exports
3) WSJ-E: Mitchell & Quinlan -- The End of Europe's Savings-Tax Cartel [Excerpt:] 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
4) Treasury spokesperson reaffirms Secretary O'Neill's commitment to oppose tax harmonization…IRS tries "to sabotage President Bush's economic team" A Treasury spokesperson 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 CF&P 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. July 30, 2002, Tax-News.com, by Mike Godfrey, US Administration Repeats Opposition To EU Savings Tax July 25, 2002, The Bureau of National Affairs, Treasury, EU Still in Contact on Savings Tax; Interest Group Asserts White House Rejection
5) Coalition Rejects "Clinton-Lite" IRS Regulation; Urges Administration to Rein in Treasury Bureaucracy [Excerpt from Press Release:] According to Andrew F. Quinlan, President of the Center for Freedom and Prosperity, "This proposed regulation will drive capital out of America and hurt U.S. financial markets. This 'new'
regulation is based on the same misguided policies the Clinton Administration tried to sneak through during its last few days. Unfortunately, the IRS apparently puts the interests of foreign tax collectors above the
interests of the American people, but we are confident that the Bush Administration will withdraw this 'Clinton-Lite' regulation at the first possible moment since it clearly undermines the President's economic
growth agenda." Mr. Quinlan added, "The Coalition for Tax Competition will encourage taxpayers to make their voices heard during the public comment period. We expect this grassroots opposition, combined
with testimony against the proposal, will help torpedo this tax harmonization scheme." [Link to full press release below:] News Clips: August 6, 2002, The Bureau of National Affairs, Criticism Continues for Narrowed Proposal On Nonresident Alien Interest Reporting August 1, 2002, Tax-News.com, by Mike Godfrey, US Treasury Warms Over Clinton-Era Bank Interest Tax Rules Links to additional information: IRS New Proposed Regulation: Letter from 46 Lawmakers Urging Withdrawal of Clinton-Era IRS Regulation: Accuse IRS of Putting Foreign Tax Collectors Ahead of US Economic Interests – April 9, 2002 Letter from 27 of the Country's Most Prestigious Free Market Groups Urging the Bush Administration to Oppose the Clinton-Era IRS Bank Deposit Interest Regulation – December 19, 2001: CF&P and the Coalition for Tax Competition advocate pulling IRS regulation on the reporting of bank deposit interest paid to nonresident aliens in a letter to the Senate – November 1, 2001 Link to CF&P dedicated web page on withdrawing the IRS regulation Secretary Paul O'Neill's Statement on sharing information, May 11, 2001 Information on the Coalition for Tax Competition:
6) Bill Thomas Warns O'Neill of EU's Tax Cartel; Questions Wisdom of Clinton-Era IRS Reg Bill Thomas, Chairman of the House of Representatives' Committee on Ways and Means, warned Treasury Secretary Paul O'Neill that the European Union's "savings tax directive" could drive capital out of the U.S. economy. Thomas also expressed doubts about a Clinton-era proposed IRS regulation which would require U.S. banks to report interest earned on savings by non-resident aliens to their home countries. Because of his concern, Chairman Thomas asked the Administration to clarify its official position on both initiatives and mentioned the possibility of holding hearings. Excerpts from letter: Thomas on the European Union's "savings tax directive": "The EU's 'savings tax directive', to which the United States must agree for it to be implemented, appears to be a clear attempt by the European Union to form a tax cartel whereby high tax rates can be more easily maintained. Like the proposed IRS regulation, participation in this cartel could cause capital flight from the United States. In addition, this initiative would appear to stifle the global competitive forces that have led to lower tax rates around the world." Thomas on the proposed IRS regulation: "As I expressed on the floor of the House of Representatives on July 25, 2001, I am concerned that the proposed regulation could cause significant flight of capital out of the United States. Furthermore, I am concerned that this significant change in tax policy would hinder our efforts to reform the tax code to promote greater efficiency and growth. Finally, there are questions as to whether this proposed regulation contradicts Congressional intent." Link to text of letter: Link to PDF file: News Stories: July 31, 2002, The Bureau of National Affairs, Thomas Mulls Hearing on EU Savings Tax, Nonresident Alien Interest Reporting Rules August 1, 2002, Tax-News.com, by Mike Godfrey, US Treasury Warms Over Clinton-Era Bank Interest Tax Rules
7) Mitchell Condemns OECD scheme in Foreign Policy. As Part of its effort to thwart "harmful tax competition," the Organization for Economic Co-operation and Development (OECD) recently published a blacklist of seven countries and principalities deemed "uncooperative tax havens" – so named because they refuse to sign an agreement to eliminate their low-tax policies and financial privacy laws. The OECD deputy secretary-general asserts that these havens encourage tax cheating and distort the flow of capital. But hindering fiscal competition only serves to protect governments from the disciplining forces of globalization. [The following is a link to Dan Mitchell's article:] July/August 2002, Foreign Policy, by Dan Mitchell, Between the Lines: Havens Can Wait
8) NTU's Eric V. Schlecht: Bringing Us All Down -- The Europeans want to sink global tax competition [Excerpt] My experiences also reminded me why tax competition is so important to developing countries, as a large section of Panama's economy is reliant upon its ability to compete in the international financial markets. Nobody needs to remind the Panamanians of this, however. Panama's appreciation for tax competition and financial privacy stem largely from the fact that international government bureaucracies like the Organization for Economic Cooperation and Development (OECD) and the European Union (EU) are attempting to punish Panama for its competitive markets by imposing onerous reporting requirements on its banking industry — all in an effort to make the small country less attractive to investors from Europe. [Link to full article below:] July 22, 2002, National Review Online, by Eric V. Schlecht, Bringing Us All Down
9) Mitchell applauds Ways & Means Chairman for trying to reduce tax bias against US multinationals [Excerpt] . . . Worldwide taxation, by contrast, is a millstone around the neck of U.S. companies. Indeed, the desire to escape the IRS' global tax reach is the primary reason some American companies have decided to recharter in low-tax jurisdictions like Bermuda and the Cayman Islands (a process sometimes referred to as inversion). Simply stated, they want to compete on a level playing field with their foreign competitors. This is why the legislation recently proposed by Bill Thomas, California Republican and chairman of the House tax-writing committee, is a significant step in the right direction. Unlike the anti-inversion bill proposed by Sens. Max Baucus, Montana Democrat, and Charles Grassley, Iowa Republican — popularly know as the "Dred Scott Tax Bill" since it assumes corporations belong to the IRS and are not allowed to escape bad tax law — Mr. Thomas actually reduces some of the problems in the tax code. [Link to full op-ed below:] July 26, 2002, The Washington Times, by Daniel J. Mitchell, Tax bill with a competitive edge July 31, 2002, Tax-News.com, by Mike Godfrey, Bill Thomas Fights To Modernize Government's Tax Models
10) The Left prefers Demagoguery and Hysteria. . . U.S. Workers, Shareholders and Consumers are the Big Losers The dark forces of fear and envy have raised the demagoguery and hysteria meter to an all-time high on companies reincorporating in low-tax countries. Connecticut lawmakers this week got their wish when Stanley decided it would not reincorporate in Bermuda. The reasons that forced them to consider reincorporating oversees are still there. What will Stanley do? Historically, cutting jobs is the fastest way to reduce costs. So who will Connecticut politicians blame if Stanley reduces its workforce? Below are several news clips that should bring you up-to-date on the issue. August 6, 2002, The New York Times, By David Cay Johnston with Jonathan D. Glater, Effort to Curb Tax Havens Could Be Costly for Consultant August 2, 2002, Forbes.com, by Dan Ackman, Stanley Works Stays Home August 2, 2002 Tax-News.com, by Mike Godfrey, Stanley Works Backs Off Bermuda Move August 1, 2002, The New York Times, By Carl Hulse, Senate Moves Against Tax-Haven Companies August 1, 2002, Boston Globe, By Susan Milligan, Senate takes aim at offshore tax havens; Firms would lose defense contracts Jul 31, 2002, The Associated Press, By Curt Anderson, Democrats Gaining Traction in Election-Year Effort to Halt Corporate Relocations to Bermuda July 30, 2002, USA Today, By William M. Welch, Offshore tax shelters under fire Jul. 30, 2002, Philadelphia Inquirer, Federal Law Blamed for Tax Havens July 29, 2002, The Mercury News, By Elaine Walker, `Bermuda tax loophole' under scrutiny July 30, 2002, Washington Post, By Juliet Eilperin and Jonathan Weisman, Congress Targets Tax Havens: House Vote Shows Perception of Corporate Abuse July 27, 2002, Associated Press, By Curt Anderson, Democrats win in campaign-season effort vs. offshore corporations July 18, 2002, Mondaq, by Mr Ross Webber, Bermuda: Bermuda, Still the Offshore Domicile of Choice July 12, 2002, Tax-News.com, by Mike Godfrey, House Tax Leviathan Splats Tax Dodgers July 11, 2002, Tax-News.com, by Leroy Baker, House Panel Votes To Punish Companies Which Move Offshore
11) California's Treasurer Grandstands and Hurts California's Consumers California State Treasurer Phil Angelides announced a policy prohibiting business dealings with publicly-held U.S. corporations that relocate offshore. The Treasurer also proposed that California Public Employees' Retirement System (CalPERS) and California State Teachers' Retirement System (CalSTRS), the State's giant pension funds of which he is a Board member, stop investing in or otherwise doing business with, these U.S. corporations that expatriate. This shortsighted protectionism will only hurt Californians by reducing investment options and raising the cost of doing business. We can only hope that more levelheaded policymakers can stop this self inflicted wound on the Californian economy. News Clips: July 27, 2002, The New York Times, By David Cay Johnston, Pressure on Companies Using Tax Dodge July 26, 2002, Washington Post, By Anitha Reddy, Calif. Funds Urged to Bar Tax-Haven Investments July 25, 2002, San Francisco Chronicle, by Robert Collier, Treasurer seeks tax-shelter blacklist: Angelides would block state funds from going to companies that shift assets overseas but do
business here July 25, 2002, Associate Press, By Jennifer Coleman, Treasurer wants pension blacklist of companies in tax havens
12) De Rugy: Gone Fishin': The IRS has launched yet another scare campaign targeting offshore credit cards. [Excerpt] . . . IRS official want credit card companies to violate the privacy rights of their customers. . . . The IRS is also asking credit card companies to act as law enforcement agents and to start spying on their customers worldwide. [Link to full article below:] July/August 2002, Vault, by Veronique de Rugy, Gone Fishin': The IRS has launched yet another scare campaign targeting offshore credit cards.
13) Former Congressman Bob Bauman on the "Faceless Bureaucrats" working against America's best interests [Excerpt from one of Mr. Bauman's A-Letter's:] Most of these people are not conservatives. Big government and spending your tax money is their life blood. Many of these termites thwart presidential policies at every turn, unless and until they are forced to tow the White House line -- if there is one. Faceless bureaucrats make decisions that don't generate headlines, but that often represent enormous threats to America's best interests. [Link to full commentary below:] July 26, 2002, The Sovereign Society Offshore A-Letter, by Bob Bauman, COMMENT: Termites at Work
14) Nat Hentoff: Rescued by Dick Armey from Big Brother [Excerpt] . . . Mr. Armey, a conservative, merits the Liberty Medal for reminding Mr. Ashcroft and Homeland Security Director Tom Ridge (a supporter of Operation TIPS) that, as the president has said all along and sometimes forgets, everything we do for national security must be within the bounds of the Constitution. "Citizens," Mr. Armey said recently on NBC's "Meet The Press," "should not be spying on one another." In evaluating the 216-page bill creating a Homeland Security Department, Mr. Armey also rejected a national identification card, which the president advocates, saying that the "authority to design and issue these cards shall remain with the states." More important, he added that, "The use of biometric identifiers and Social Security numbers with these cards is not consistent with a free society." [Link to full op-ed below:] July 29, 2002, The Washington Times, by Nat Hentoff, Rescued by Dick Armey from Big Brother Additional Clips on TIPS August 5, 2002, The Washington Times, by Nat Hentoff, One nation, divisible by spies July 29, 2002, Cato Institute, by Gene Healy, Volunteer Voyeurs? July 26, 2002, The New York Times, By Michele Kayal, The Societal Costs of urveillance July 19, 2002, The Washington Times, by Ellen Sorokin, Security bill loses ID card, TIPS July 17, 2002, Boston Globe, Editorial: Ashcroft vs. Americans July 25, 2002, Business Week, By Jane Black, Some TIPS for John Ashcroft: Mr. Attorney General, forget your plan for a system to promote Americans spying on Americans. It won't work -- and is
un-American
15) Jansen: Will New Treasury Rules Prove to be an Enabler of Privacy Invaders? [Excerpt] "Requiring financial institutions to keep extensive records on their customers does not mean a safer, more secure America. It does, however, ensure a more expensive, time-consuming burden for financial institutions," Jansen said. "Treasury and other Federal regulators should do their part in the War against Terrorism by providing good information on suspected terrorists to financial institutions. Our weak link in the financial War against Terrorism has not been the financial community but the Federal intelligence and law enforcement agencies." [Link to fill press release below:] July 18, 2002, Free Congress Foundation, Press Release: Jansen: Will New Treasury Rules Prove to be an Enabler of Privacy Invaders? Task Force on Information Exchange and Financial Privacy report shows how privacy and financial security go together. The report can be accessed at:
August 6, 2002, Tax-News.com, by Mike Godfrey, Leading US Treasury Advisor Speaks Out On Money Laundering August 4, 2002, Scotland on Sunday, By Murdo Macleod, Freeserve set to hit on Madeira tax haven July 31, 2002, The Times (London), By Lea Paterson and Gary Duncan, Anti-euro mood hardens among Britons July 30, 2002, The Washington Times, Editorial: Treasury lumbers after terrorist $$ July 30, 2002, Tax-News.com, by Jason Gorringe, Brits Classify Ireland As A Tax Haven July 28, 2002, The Observer (London), by Prem Sikka, 'Global' dodge lets big firms off hook: Companies are calling themselves international but then failing to take any responsibility for dirty deals abroad
July 26, 2002, BBC, US expands dirty money investigation July 24, 2002, The Washington Times, By Rowan Scarborough, Foundation Seeks Probe of Justice's Tax-Case Ploy July, 18, 2002, The Nassau Institute, Monopolies hurt Bahamians July 18, 2002, Forbes.com, by Vahan Janjigian, What's Worse, Fraud Or The Feds? July 18, 2002, Tech Central Station, by Eileen Ciesla, Diminishing Sovereignty July 18, 2002, Tax-News.com, by Ulrika Lomas, Pascal Lamy Warns US Over Tax Hike Proposals For Foreign Companies July 18, 2002, Tax-News.com, by Mike Godfrey, Many Republicans Unhappy With Thomas's Tax Pantechnicon July 17, 2002, The Guardian (London), David Pallister and Owen Bowcott, Banks to shut doors on Saudi royal cash: King Fahd is moving large sums through Liechtenstein July 17, 2002, National Center for Policy Analysis, by Bruce Bartlett, Will Congress Adopt Dynamic Budget Scoring? July 12, 2002, National Review Online, by Victor Davis Hanson, European Morality?: We should look at what our allies do rather than say. July 11, 2002, Tax-News.com, by Ulrika Lomas, Tax Evasion Off The Agenda As Liechtenstein And US Sign Treaty July 11, 2002, Ludwig von Mises Institute, by William L. Anderson, Congress, Accounting, and the Free Market July 9, 2002, Tax-News.com, by Amanda Banks, Impact Of Information Exchange On IoM 'Hard To Assess' July 7, 2002, Swiss Info, Banks face tougher money laundering rules May 13, 2002, Forbes.com, Forbes Global Misery Index 2002 May 2, 2002, The Austin Review, by Ken Bell, To the UN: No Taxation Without Representation
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