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Center for Freedom and Prosperity's E-mail Update 1) In Memoriam: John Berthoud (1962 -- 2007) 3) Anti-Tax Haven Bills are Ill-Conceived, Discriminatory and Violate International Trade Laws 4) Dan Mitchell to Speak on Tax Competition Today in Croatia 5) Will Congress Allow and Internet Tax Grab? 6) Politicians and Retailers Conspire to Impose Sales Tax Cartel 7) Dan Mitchell's Presentation to the European Resource Bank on the Foundations of Liberty 8) CF&P's The Market Center Blog 9) Richard Rahn: Hypocrites -- Greenspan Takes it on the Chin
1) In Memoriam: John Berthoud (1962 -- 2007) The Center for Freedom and Prosperity has lost a loyal friend and a great leader in the fight against statism and big government. John Berthoud, the President of the National Taxpayers Union, passed away of natural causes on September 27, 2007. John led the National Taxpayers Union for 11 years. He was a leading voice for free-marketers and his voice will be greatly missed. We give our sincere condolences to his family and friends. Personally, John was one of my mentors and someone I tried to emulate. When I co-founded the Center for Freedom and Prosperity in 2000, John was one of our early supporters and frequently went out of his way to help us. John would always be available for advice, a quote for a press release or a blurb in support of the Center. His friendship and counsel will be greatly missed. Thank you, John, for your unselfish help and leadership. More Information on the Passing of John Berthoud: September 28, 2007, The Washington Times, by Robert Stacy McCain, Tax reform's 'happy warrior' Berthoud dies at 45 Fishwrap Blog of the Washington Times
2) CF&P Foundation: Statistical Study Confirms that High Tax Rates Discourage Productive Behavior… America Should Learn From Europe's Mistakes [Excerpt from Press Release] The Center for Freedom and Prosperity Foundation released a study estimating the negative employment impact of high tax rates on labor. The Prosperitas report, which analyzed data from the United States and several European nations, is adapted from A.J. (Bram) de Bruin's thesis, submitted as part of the graduate program in Econometrics and Management Science at Erasmus University in Rotterdam, Netherlands. Mr. de Bruin's paper entitled, "Labour Supply and Marginal Tax Rates: A case study of Belgium, France, Italy, the Netherlands, the United Kingdom and the United States of America," investigates the effect of labor income taxes on the supply of paid labor for several Western countries over the last two decades. In addition to confirming the damaging effect of labor income taxes, the paper also gives specific estimates of its magnitude for several countries and at the same time sheds some light on the amount of time it takes for changes in taxation to affect the labor market. September 27, 2007, CF&P Foundation Press Release, Statistical Study Confirms that High Tax Rates Discourage Productive Behavior: America Should Learn From Europe's Mistakes September 2007, CF&P Foundation Prosperitas Study Vol. VII, Issue VI, Labour Supply and Marginal Tax Rates: A case study of Belgium, France, Italy, the Netherlands, the United
Kingdom and the United States of America, by Bram de Bruin
3) Anti-Tax Haven Bills are Ill-Conceived, Discriminatory and Violate International Trade Laws [Excerpt from Bruce Zagaris' commentary:] U.S. legislators have recently introduced several pieces of legislation targeting transactions involving tax haven or offshore secrecy jurisdictions as part of efforts to close the growing U.S. tax gap. The first wave of bills -- S. 396, which has been incorporated in S. 554, the budget resolution and S. 681, the Stop Tax Haven Abuse Act -- target offshore secrecy jurisdictions and include lists of specific countries. Next, on July 13, Sen. Carl Levin, D-Mich., inserted appropriations language to bar the award of future government contracts to any U.S. company that has performed a corporate inversion using an offshore jurisdiction. On July 24, Rep. Lloyd Doggett, D-Texas, introduced H.R. 3160, the "Fairness in International Tax" bill. Doggett's bill seeks to target the abuse of international tax treaties, which the U.S. Department of the Treasury says have cost $7.5 billion in lost tax revenue over 10 years. On July 27, the House approved H.R. 2419, the latest farm appropriations bill, which includes Doggett's provisions. As Congress searches for revenue to fund international and domestic projects in the current budget environment, legislators are trying to limit the ability of U.S. citizens and companies to obtain tax benefits from doing business abroad. However, the new tax bills violate international trade laws and U.S. tax treaties. They are part of a crude effort to overcompensate for government spending run amok as the United States remains bogged down in Iraq. … Ironically, U.S. efforts to crack down on transactions involving tax haven and offshore secrecy jurisdictions may undermine the U.S.'s role as the largest market for international investors seeking secrecy and tax incentives. For example, interest earned by U.S. bank accounts held by foreign nationals is exempt from U.S. taxation. The United States only regularly exchanges information on earnings from such accounts with Canada, and the Bush administration has not made final a proposed Clinton administration regulation to extend regular reporting of such earnings to OECD countries. [Link to complete article below:] September 24, 2007, Tax Notes International, By Bruce Zagaris, U.S. International Tax Policy: Protectionism Disguised as Enforcement
4) Dan Mitchell to Speak on Tax Competition Today in Croatia. October 15, 2007, Zagreb, Croatia, International Leaders Summit on Economic Growth The Future of Croatia: Advancing Economic Freedom and Croatia's Prime Ministerial Election Debate Event
5) Will Congress Allow and Internet Tax Grab? Time is running out on the Internet tax moratorium. As the Wall Street Journal explains, this could mean an orgy of new taxes and fees by greedy state and local governments: [Excerpt from the Wall Street Journal] The Internet Tax Freedom Act, enacted in 1998 and since extended twice, prevents multiple and discriminatory taxes on the Internet. In other words, different states can't tax the same e-commerce transaction, and states and cities can't create Internet-only taxes that don't exist offline. So, except for a few grandfathered states, Internet access taxes are banned. But a Congressional failure to extend the moratorium would quickly show up on monthly bills, and not quietly. Taxes on telephone service can run above 20%, more than triple the average general sales tax rate. Absent the moratorium, state revenue departments will begin to issue letters ruling that Internet access services are subject to these same sky-high telephone tax rates. The revenuers will do this because they can (until state courts judge their merit), not because they need the money. State and local governments have enjoyed 17 straight quarters of increasing revenues. [Link to complete article below:] September 26, 2007, The Wall Street Journal, Broadband Taxman, Note: The above information first appeared on our daily web log The Market Center Blog:
6) Politicians and Retailers Conspire to Impose Sales Tax Cartel As reported by Tax-news.com, collection of trade associations is calling on Congress to impose the so-called Streamlined Sales and Use Tax Agreement on all states. Their argument is that it is unfair to let online companies make tax-free sales to out-of-state consumers (states routinely choose not to tax their retailers who make such sales). There is an inequity in the current approach, to be sure, but politicians (with help from naive business groups) are picking the wrong approach. Creating a nationwide tax cartel - one that will require a massive invasion of privacy because of a database of online purchases - will insulate politicians from competition by making it extremely difficult for consumers to shop where taxes are lower. The right way to deal with the inequity is for states to apply their sales taxes (ideally at a low rate) on a non-discriminatory basis. In other words, the sales tax would apply to all sales made in a state, regardless of whether a good is sold in person or online, and regardless of whether the customer is an in-state resident or out-of-state resident. This would eliminate an inequity, preserve tax competition, and protect privacy. [Excerpt from Tax-News.com] The US National Retail Federation and nearly 100 retailers and trade associations are urging Congress to approve legislation making it easier to require internet merchants, mail-order houses and other "remote sellers" to collect sales tax across state lines. Coalition members are hoping to see action this fall on the Sales Tax Fairness and Simplification Act, which is pending in both the House and Senate. The measure would allow states that have implemented the Streamlined Sales and Use Tax Agreement to require that out-of-state merchants collect sales tax on merchandise sold to residents of their states. ...While the Streamlined Sales and Use Tax Agreement went into effect on a voluntary basis in 2005, the coalition says that passage of federal legislation is needed before sales tax collection can become mandatory. Thus far, 22 states have passed legislation implementing the agreement. In addition, more than 1,000 companies have participated in the agreement voluntarily, and have collected more than $125 million in state and local sales tax that would otherwise have gone unpaid. The NRF helped draft the Streamlined Sales and Use Tax Agreement, and has long argued that remote sellers enjoy an unfair price advantage in situations where they are not required to collect sales tax. The NRF wants a level playing field where all retailers are subject to the same tax rules when their merchandise is sold from a store, through a catalog or over the internet. [Link to complete article below:] September 25, 2007, Tax-News.com, by Leroy Baker, US Retailers Urge Congressional Action On Internet sales Taxes Note: The above information first appeared on our daily web log The Market Center Blog:
7) Dan Mitchell's Presentation to the European Resource Bank on the Foundations of Liberty Linked below is the PowerPoint presentation by Dan Mitchell to the European Resource Bank in Bucharest, Romania on the Foundations of Liberty: Decentralization and Systems Competition. [Excerpt from PowerPoint presentation:] The Public Choice Challenge
Federalism and Systems Competition
Tax Competition is Working
September 14, 2007, Presentation to the European Resource Bank, Bucharest, by Dan Mitchell, "Decentralization and Systems Competition: Foundations of Liberty"
8) CF&P's The Market Center Blog Just is case you missed it… some interesting headlines from our daily blog. Wednesday, October 10, 2007, The Market Center Blog, Taxes, Trade, and the "Level Playing Field." Tuesday, October 9, 2007, The Market Center Blog, OECD Calls for a Higher VAT...Again. Monday, October 8, 2007, The Market Center Blog, Seeking to Expand Savings Tax Cartel, Europe's Greedy Politicians Hold Trade Liberalization Hostage. Monday, October 8, 2007, The Market Center Blog, Law-of-the-Sea Treaty Contrary to Reagan's Vision. Friday, October 5, 2007, The Market Center Blog, European Bureaucrats Use Antitrust Laws to Attack US Companies. Tuesday, September 25, 2007, The Market Center Blog, America's "Worldwide" Tax System Undermines Competitiveness. Monday, September 24, 2007 The Market Center Blog, Internet Tax Battle Reaching Critical Stage.
9) Richard Rahn: Hypocrites -- Greenspan Takes it on the Chin Alan Greenspan rightly criticized George Bush and congressional Republicans in his new book, but Richard Rahn pointedly asks why the former Fed Chairman did not speak up when his words may have saved taxpayers by shaming the GOP into being more responsible: [Excerpt from Dr. Rahn's column:] Former Federal Reserve Chairman Alan Greenspan has just come out with the predictable book by a former government official, where he claims others made the mistakes. He now skewers the Bush administration and Congress for their irresponsible and excessive spending. However, while many of us were fighting the battle, he was silent when his words might have caused the Washington body politic to act a bit more responsibly. One can only conclude Mr. Greenspan put a higher value on his own reappointment and good press from the liberal media than on the fiscal health of the nation he had pledged to serve. September 30, 2007, The Washington Times, by Richard W. Rahn, Hypocrites Note: The above information first appeared on our daily web log The Market Center Blog:
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