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Center for
Freedom and Prosperity
 P.O. Box 10882
Alexandria, Virginia 22310-9998
Phone: 202-285-0244
Fax: 208-728-9639
                                            

CFP Update, September 28, 2001

Center for Freedom and Prosperity's Weekly Update

1) Washington Update: Tax competition opponents try to exploit terrorist attacks, but White House Spokesman rejects linkage

2) Six more Members of Congress ask the Bush Administration to protect tax competition financial privacy, and fiscal sovereignty

3) Michael Peel of the Financial Times is "Wrong Again."

4) Low-tax countries help track terrorists and the hidden path taken by the terrorists

5) The Heritage Foundation foreign policy experts demonstrate right way to track terrorist money

6) Demagoguery from the press

7) Bruce Bartlett on the Tobin Tax

8) Twenty-Three Free Market Groups Ask the President to Enact Pro-Growth Tax Policies to Jump Start the Economy

9) Free Congress' Jansen Testifies before Congress on the Anti-Terrorism Act

10) CFP's Quinlan to Speak at Offshore Trust Summit 2001

11) A Tribute to Trade

12) Richard Rahn on airline safety: sense and nonsense

13) Free Congress: Establishes Online Petition on civil liberties and constitutional rights

14) CFP News Clips

 

1) Washington Update: Tax competition opponents try to exploit terrorist attacks, but White House Spokesman rejects linkage

The need for effective international cooperation in the fight against crime has been clearly evident in the aftermath of the terrorist attacks. Fortunately, this seems to be happening. But we need to make sure that this cooperation is something that does not fade after Bin Laden, et al, meet their well-deserved fates. In hopes that something good can result from the despicable attack on NYC and the Pentagon, policy makers should seek to expand the network of mutual legal assistance treaties (MLATs) that govern international cooperation and to see whether the procedures implementing these treaties can be improved.

Unfortunately, our ability to successfully pursue this approach is compromised by the anti-tax competition agenda of the Organization for Economic Cooperation and Development (OECD). Many low-tax jurisdictions have been unable to get effective MLATs because OECD nations often try to insist that extra-territorial enforcement of tax policy be part of these agreements. And some low-tax jurisdictions have MLATs, but have been reluctant to offer quick and effective cooperation because of widespread evidence that the process is being abused when high-tax nations seek information under false pretenses.

Adding insult to injury, some OECD advocates even argue that recent events are a reason to support their agenda. Their simplistic analysis is that terrorists hide behind financial privacy laws and this will somehow stop if low-tax jurisdictions are compelled to provide tax information to high-tax nations. The attached memo explains in some detail why this is not accurate, but the most important point to remember is that every nation has financial privacy (including the US) and every nation allows that privacy to be broken for purposes of law enforcement. This is why MLATs are the most effective way of combating crime across borders.

Fortunately, the Administration understands this point. When asked this week about the OECD's attack on financial privacy, White House Press Spokesman Ari Fleischer said, "I think you should not confuse the two issues, one deals with domestic laws in dealing with tax consequences and tax dodges or tax evasions; this deals with terrorism."  Mr. Fleischer sees through the OECD's demagoguery.

2) Six more Members of Congress ask the Bush Administration to protect tax competition financial privacy, and fiscal sovereignty

Many Members of Congress heard from their constituents over the summer about the need to protect America's position in the world economy by defending tax competition.  The Center's direct mail campaign played a critical role in bringing about this grassroots sentiment. The six letters below demonstrate that lawmakers, like the White House, are not going to let high-tax demagogues exploit the terrorist attacks.

Rep. Jim Saxton of New Jersey, Chairman of the Joint Economic Committee
http://www.freedomandprosperity.org/ltr/saxton/saxton.shtml
Office link:
http://www.house.gov/saxton/

Rep. Lee Terry of Nebraska, Commerce Committee member
http://www.freedomandprosperity.org/ltr/terry/terry.shtml
Office link:
http://www.house.gov/terry/

Rep. Randy Forbes of Virginia, the newest member of Congress
http://www.freedomandprosperity.org/ltr/forbes/forbes.shtml
Office link:
http://www.house.gov/forbes/

Rep. Bob Goodlatte of Virginia, assistant majority whip and Judiciary Committee member
http://www.freedomandprosperity.org/ltr/goodlatte/goodlatte.shtml
Office link:
http://www.house.gov/goodlatte/

Rep. Wally Herger of California, member of the House tax writing committee
http://www.freedomandprosperity.org/ltr/herger/herger.shtml
Office link:
http://www.house.gov/herger/

Rep. Pete Sessions of Texas, member of the powerful House Rules Committee and the Banking Committee
http://www.freedomandprosperity.org/ltr/petesessions/petesessions.shtml
Office link:
http://www.house.gov/sessions/

3) Michael Peel of the Financial Times is "Wrong Again." His most recent article, which implies that low-taxes and territorial tax systems promote crime, could have been ghost-written by the bureaucrats at the OECD and EU.

Below are links to Andrew Quinlan's and Dan Mitchell's Letters to the Editor on Michael Peel's Financial Times story (September 27, 2001, A belated unanimity).  We also have a link to Mr. Peel's article:

Quinlan's letter:
http://www.freedomandprosperity.org/Papers/peel/peel.shtml#1

Mitchell's letter:
http://www.freedomandprosperity.org/Papers/peel/peel.shtml#2

September 27, 2001, Financial Times, by Michael Peel, A belated unanimity: Action against money-laundering in the wake of the assault on New York is welcome but long overdue
http://globalarchive.ft.com/globalarchive/article.html?id=010927000948

4) Low-tax countries help track terrorists and the hidden path taken by the terrorists

September 26, 2001, Tax-News.com, by Justin Gorringe, Offshore Jurisdictions Will Agree To US Anti-Terrorist Demands
http://www.tax-news.com/asp/story/story.asp?storyname=5544

September 26, 2001, Tax-News.com, by Amanda Banks, The Bahamas New Financial Services Laws Will Help Fight Terrorism
http://www.tax-news.com/asp/story/story.asp?storyname=5541

September 21, 2001, Washington Post, By Robert O'Harrow Jr., David S. Hilzenrath and Karen DeYoung, Bin Laden's Money Takes Hidden Paths To Agents of Terror
http://www.washingtonpost.com/wp-dyn/articles/A642-2001Sep20.html

5) The Heritage Foundation foreign policy experts demonstrate right way to track terrorist money.

The new paper linked below lays out a path for law enforcement seeking to investigate financial links to criminal activity. Most importantly, these experts find no reason to support OECD and EU tax harmonization initiatives or other anti-competition schemes. Instead, as the Center has maintained, they call for penalties on jurisdictions that fail to cooperate in the fight against real crime. The following passage highlights the best route to international cooperation:

"Expand the network of mutual legal assistance treaties and implement procedures to ensure timely and effective international cooperation in the fight against crime . Law enforcement officials generally can count on international cooperation because of mutual legal assistance treaties and other international commitments. Nations traditionally have observed the principle of "dual criminality," which means that they help each other investigate and prosecute actions that are against the law in both nations. Murder, of course, is universally recognized as a crime, so all jurisdictions should cooperate in the battle to catch and punish the terrorists. Governments should work together to expand these treaties to cover all jurisdictions and to create procedures that will allow quick compliance in high-priority cases. They should be prepared to ostracize and punish jurisdictions that resist by placing them on a watch list of countries, more carefully scrutinizing financial transactions originating from those countries, and, in extreme cases, restricting the ability of their financial institutions to conduct financial transactions within the United States."  Link to paper below:
http://www.heritage.org/library/backgrounder/bg1479.html

6) Demagoguery from the press

Some reporters, probably because of laziness and lack of knowledge, have written articles suggesting that low-tax countries help criminals and terrorists.  Dan Mitchell of the Heritage Foundation wrote recently:

"Every nation has banking secrecy - including the US - and every nation suspends that secrecy for criminal investigations. Indeed, the evidence accumulated so far shows that Bin Laden, et al, used 'onshore' jurisdictions like the UK for his transactions. Moreover, there is no evidence that so-called tax havens attract a disproportionate level of criminal activity. The U.S. government, for instance, admits that half the world's money laundering takes place in America (we are about 27% of world economic output). The United Nations even issued a report that criminals avoid 'offshore' jurisdictions because they act as a "red flag" for investigators."

Below are links to some of the recent articles mentioned above:

September 20, 2001, New York Times, By Tim Weiner and David Cay Johnston, The Paper Trail: Roadblocks Cited in Efforts to Trace Bin Laden's Money
http://www.nytimes.com/2001/09/20/business/20MONE.html

September 19, 2001, MSNBC.COM, By Lucy Komisar, Bank secrecy gives terror safe haven
http://www.msnbc.com/news/631214.asp

September 21, 2001, Financial Times, by John Willman, COMMENT & ANALYSIS: Cleaning up: The global economy has made money-laundering easier and less detectable. But following last week's terrorist attack, US financial regulators are set to clamp down
http://globalarchive.ft.com/globalarchive/article.html?id=010921001503

September 26, 2001, Bloomberg News, By Matthew Lynn, Time to End Banking Secrecy
http://www.bloomberg.com/feature/feature1001513609.html

September 25 2001, Financial Times, By Judy Dempsey, Brussels sees need to focus on tax havens
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT362NTV0SC

September 23, 2001, The Observer, by Conal Walsh, America wants to scrap the world's tax havens
http://www.observer.co.uk/business/story/0,6903,556350,00.html

7) Bruce Bartlett on the Tobin Tax

[Excerpt]: In coming months, Americans are like to start hearing a great deal about something called the "Tobin tax." Named for Nobel Prize-winning economist James Tobin of Yale, it would levy a small tax on all foreign exchange transactions. Although designed primarily to curb excessive volatility in foreign exchange markets, the Tobin tax has been seized upon by anti- globalization extremists, who have made it a key part of their agenda. -- Link to full article below:

September 5, 2001, National Center for Policy Analysis: Opinion Editorial, by Bruce Bartlett, Taxing Foreign Exchange Transactions
http://www.ncpa.org/edo/bb/2001/bb090501.htm

8) Twenty-Three Free Market Groups Ask the President to Enact Pro-Growth Tax Policies to Jump Start the Economy:

Press Release: [Excerpt]

The plan calls for substantial tax reform and significant tax rate reductions, including:

  • A shift toward "expensing" of business investment.
  • Accelerating implementation of the income tax rate reductions.
  • Capital gains tax rate reduction.

Late last week, Empower America co-director Jack Kemp, on behalf of the signatories, transmitted the letter to the President stating his full support of the economic rebuilding and recovery package. On Capitol Hill, Congressman Paul Ryan (R-WI) submitted the letter and the coalition plan for the Congressional Record.  Congressman Ryan stated that, "Our tax code punishes saving and investing which fuels the entrepreneurial spirit of America. Removing these obstacles will unleash the capital and investment needed to rebuild America's economy and create more jobs."

Below is the link to the coalition letter to the President:
http://empower.org/sept20letter.pdf

9) Free Congress' Jansen Testifies before Congress on the Anti-Terrorism Act

September 24, 2001, Statement by Free Congress' Brad Jansen before the House Judiciary Committee on the Anti-Terrorism Act of 2001
http://www.freecongress.org/centers/technology/antiterrorismtestimony.htm

10) CFP's Quinlan to Speak at Offshore Trust Summit 2001

The 13th Annual Offshore Trust Summit with be held October 16 - 19 at the Biltmore Hotel in Coral Gables, FL. For more information, please visit the link below:
www.ibcusa.com/offshoretrust

11) A Tribute to Trade

[Excerpt]: The sight of New York City's twin World Trade Center towers falling to the ground, the result of an act of deliberate aggression, seems to symbolize two points that seem entirely forgotten today: the magnificent contribution that commerce makes to civilization and just how vulnerable it is to its enemies. If the enemies of capitalist commerce are hellbent on the destruction of the source of wealth, there are few means available to prevent it. . . . We mourn the lost lives of those who worked in the World Trade Center towers, which are no more. We mourn their lost vocations. We owe it to them to appreciate anew their contribution to society. As Mises wrote, "No one can find a safe way out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us."

LewRockwell.com, A Tribute to Trade, by Llewellyn H. Rockwell, Jr. of the Ludwig von Mises Institute
http://www.lewrockwell.com/rockwell/tradetribute.html

12) Richard Rahn on airline safety: sense and nonsense

[Excerpt]: "If you boarded an airplane and had some concern about it being hijacked, would you be more concerned about an older woman with a sewing kit, or a young man in casual clothing with no visible carry-on items as a fellow passenger? If you answered the young man, you are being rational rather than an anti-young-man bigot. Older women are not hijackers. Hijackers and terrorists are almost always men, and most often men in their 20s or early 30s." Full article linked below:
http://www.freedomandprosperity.org/Articles/rahn09-27-01/rahn09-27-01.shtml

13) Free Congress: Establishes Online Petition on civil liberties and constitutional rights

The Free Congress Foundation's Coalition for Constitutional Liberties has established a website with an online petition in support of our civil liberties and constitutional rights. It can be found at

http://www.DefendYourFreedom.org

14) CFP News Clips

September 26, 2001, Tax-News.com, by Mary Swire, Vanuatu Finance Minister Reiterates Stance Against OECD
http://www.tax-news.com/asp/story/story.asp?storyname=5543

September 24, 2001, The New Republic, by Jeffrey Rosen, Terrorism and Freedom, Then and Now: Law and Order
http://www.thenewrepublic.com/092401/rosen092401.html

September 24, 2001, Wired, by Declan McCullagh, Why Liberty Suffers in War Time
http://www.wired.com/news/politics/0,1283,47051,00.html

September 24, 2001, Agency France Press, ECOFIN UK, Dutch territories agree to apply EU savings taxation regime
http://www.afxpress.com/afxpress2/html/story_3174375.xml

September 22, 2001, San Jose Mercury News, by Paul Rogers and Elise Ackerman, Oracle boss urges national ID cards, offers free software, Idea driven by security concerns
http://www.siliconvalley.com/docs/news/svfront/ellsn092301.htm

September 20, 2001, The Guardian, by Larry Elliott, The free market tide has turned: This crisis is fuelling economic activism and a Keynesian revival
http://www.guardian.co.uk/comment/story/0,3604,554778,00.html

September 20, 2001, Associated Press, By Balz Bruppacher, Swiss: One Suspicious Bank Account Blocked in U.S. Attacks Probe
http://ap.tbo.com/ap/breaking/MGAW197VURC.html

September 20, 2001, Tax-News.com, by Mike Godfrey, US Administration Wants Weaker Financial Privacy Rules
http://www.tax-news.com/asp/story/story.asp?storyname=5466

September 18, 2001, Tax-News.com, by Jeremy Hetherington-Gore, US Moves Towards Draconian Money-Laundering Powers
http://www.tax-news.com/asp/story/story.asp?storyname=5422

September 17, 2001, www.money.telegraph.co.uk, Tax treaty blow for former US citizens
http://www.money.telegraph.co.uk/money/main.jhtml;$sessionid$AQKCFSIAADFNJQ FIQMFCFF4AVCBQYIV0?grid=M3&menuId=252&menuItemId=2864&xml=%2Fmoney %2F2001%2F09%2F17%2Fcbtax17.xml

September 15, 2001, Financial Times, By DEBORAH HARGREAVES, PERSONAL FINANCE: The taxman and I: People won't dodge their duty if it makes sense to them
http://globalarchive.ft.com/globalarchive/article.html?id=010915001294

September 13, 2001, E-Commerce Tax News, by David Hardesty, Does the WTC Tragedy End the Bank Secrecy Debate?
http://www.ecommercetax.com/doc/091301.htm

September 11, 2001, Tax-News.com, by Jeremy Hetherington-Gore, Mitchell: Will Technology Help Or Hinder The Tax Collectors?
http://www.tax-news.com/asp/story/story.asp?storyname=5316

September 11, 2001, Tax-News.com, by Mike Godfrey, US Congress In New Attack On Bermuda Insurance Industry
http://www.tax-news.com/asp/story/story.asp?storyname=5322

September 11, 2001, Tax-News.com, by Jason Gorringe, One Man And His Tax: The Tobin Debate Widens
http://www.tax-news.com/asp/story/story.asp?storyname=5321

September 10, 2001, Moreprivacy.com, by Michael S. Hyatt, Your Privacy For Sale: It's not just your name and address they're after; they want to know everything about you
http://www.moreprivacy.com/editorials/forsale.htm

September 10, 2001, Tax-News.com, by Jeremy Hetherington-Gore, Poor Professor Tobin Helps UN In World Taxation Plan,
http://www.tax-news.com/asp/story/story.asp?storyname=5298

September 7, 2001, Reuters, Oh la la! French peek at neighbours' tax bills
http://uk.news.yahoo.com/010907/80/c39jv.html

September 3, 2001, Moreprivacy.com, by Michael S. Hyatt, Government Surveillance, Part One: How the FinCEN system monitors your financial activity
http://www.moreprivacy.com/editorials/government-1.htm

September 2, 2001, Column by George Will, In Britain, a Buckley vs. a McCain
http://www.sacbee.com/voices/national/will/will_20010902.html

 

Best regards,

Andrew Quinlan
Center for Freedom and Prosperity
President
202-285-0244
208-728-9639 (efax)
quinlan@freedomandprosperity.org
www.freedomandprosperity.org

 

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