Contact Information:

Center for
Freedom and Prosperity
 P.O. Box 10882
Alexandria, Virginia

CF&P E-Mail Update,  October 31, 2003

Center for Freedom and Prosperity's E-mail Update

1) Washington Update

2) CF&P Celebrates OECD Defeat in Ottawa

3) CF&P Foundation Study Documents OECD's Failure

4) Mitchell:  "OPEC for Politicians"

5) Opposition to IRS Information Reporting Regulation Intensifies

6) U.N. Resuscitates Tax Grab Proposal

7) Cato: Threats to Financial Privacy and Tax Competition

8) Coalition For Tax Competition Praises Congressman's Tax Fight

9) WSJE:  EU's Tax Changes Scatter Corporations

10) The Wall Street Journal: Bring It On Home

11) US Economists Praise International Tax Reform

12) Bob Barr:  Unfriendly bankers

13) James Bovard: Americans' Financial Liberty Placed at Risk by Patriot Act

14) Cato:  The Internet Tax Solution: Tax Competition, Not Tax Collusion

15)'s Jim Harper Comments before the Bank Secrecy Act Advisory Group

16) Hayek Institute and Von Mises Institute to host important conferences on tax policy

17) CF&P Clips


1) Washington Update

We just completed a two-week educational campaign on Capitol Hill, meeting with more than 40 offices to discuss the importance of tax competition.  We have several meeting scheduled with Bush Administration officials and Capitol Hill Members and staffers over the next few weeks. We will continue to discuss the OECD/EU/UN tax harmonization agendas, the IRS's information sharing regulation, international tax reform, the repatriation of U.S. income earned overseas, and Rep. John Sweeney's bill to rein in the UN and OECD.

Today's update raps up our coverage of the OECD's Ottawa Global forum. We highlight our comments and our Foundation's paper that puts to rest the OECD's claim of a level playing field once and for all. We also have a video clip from a national TV program of Dan Mitchell commenting on the OECD's defeat in Canada.

We highlight the effect the EU's tax proposals are having on commerce in Europe. We also feature a Financial Times article revealing the United Nations rededication to collect global taxes and we praise Rep. Sweeney for his bill to punish the UN and OECD if they continue to promote tax policies that hurt the U.S. Also, we highlight two upcoming conferences in Europe on tax competition which both Dan Mitchell and Richard Rahn will be speaking.  If you are interested in attending either conference please see the information below.

Best regards, AQ


2) CF&P Celebrates OECD Defeat in Ottawa: Paris-Based Bureaucracy Concedes Absence of Level Playing Field

The Center for Freedom and Prosperity announced that the Organization for Economic Cooperation and Development suffered a major defeat at a Global Forum on International Tax Policy, which concluded today in Ottawa, Canada. The OECD's Global Forum, which was designed to reinvigorate the Paris-based bureaucracy's anti-tax competition initiative, was designed to convince so-called tax havens that they had to enforce the bad tax laws of Europe's welfare states.

Instead, the OECD was forced to concede that many of its own member nations also were tax havens, and that persecuted jurisdictions on the OECD blacklist had no obligation to undermine their market-based laws unless all countries agreed to the same misguided policies (the famous "level playing field" requirement). And since the European Union savings tax directive exempted numerous OECD nations from any requirement to divulge private financial data to foreign tax collectors, this set the stage for the OECD's defeat in Ottawa.

Andrew Quinlan, President of the Center for Freedom and Prosperity, remarked, "The OECD's tax harmonization effort has hit a brick wall, and this is good news for the global economy. If high-tax nations are worried that jobs and capital are fleeing to low-tax jurisdictions, they should fix their bad tax laws rather than trying to create a global tax cartel." [Link to full press release below:]

Links to statement released at the forum:

October 14-15, 2003, Statement of the Republic of Panama, At the Global Forum of the Organization for Economic Cooperation and Development (OECD), Ottawa, Canada

October 15, 2003, Sir Ronald Sanders' Second Intervention at the OECD Global Forum Conference in Ottawa.

October 14, 2003, Statement by Sir Ronald Sanders at a Roundtable organised by the Centre for Freedom and Prosperity on the eve of the OECD Global Forum Conference in Ottawa. .html

Other OECD Articles on Ottawa Global Tax Forum:

Excerpts from BNA and WTD news articles on the Ottawa Global Tax Forum

October 28, 2003,, by Mike Godfrey, Bermuda Opposition Calls For Clarification On OECD Commitments

October 21, 2003,, by Glen Shapiro, STEP Expresses Concern Over 'Blacklists' Of Non-OECD Countries

October 20, 2003, Financial Times, By Amity Shlaes, The musical discord of the marketplace

October 17, 2003,, by Mike Godfrey, Level Playing Field Not Yet Achieved, OECD Meeting Concludes

October 13, 2003,, by Robin Pilgrim, OECD Split Threatens Tax Evasion Plans


3) CF&P Foundation Study Documents OECD's Failure: Bureaucracy's Anti-Tax Competition Project Floundering

The Center for Freedom and Prosperity Foundation released a study documenting the absence of a level playing field between OECD and Non-OECD countries when it comes to divulging private financial data to foreign tax collectors. The study concludes that this represents a major setback for the Paris-based bureaucracy's anti-tax competition project and explains why this is a positive development. According to the study, "low-tax regimes must aggressively defend tax competition as a liberalizing force in the world economy" since "even OECD economists have widely written that lower tax rates and neutral treatment of capital are important contributors to economic growth."

"Today's study is an expansion and update of a Strategic Memorandum we released before the Organization for Economic Cooperation and Development's (OECD) Global Tax Forum held last week in Ottawa," said Andrew Quinlan, president of the CF&P Foundation. "The study sets the record straight once and for all that there is not a level playing field for the exchange of tax information between jurisdictions – and also explains that a level playing field based on bad tax policy would be deleterious to global economic growth." (Link to full press release and study below:)

October 2003, CF&P Foundation Prosperitas Vol. III, Issue IV, The Level Playing Field: Misguided and Non-Existent, by Dan Mitchell


4) Mitchell: "OPEC for Politicians"

As part of his monthly commentary on PBS's Nightly Business Report, Dan Mitchell explains why the OECD's defeat is a positive development.

Dan Mitchell Celebrates OECD's Loss on National TV Program, October 20, 2003 (video link)


5) Opposition to IRS Information Reporting Regulation Intensifies

1) Senate Opposition to IRS Information Reporting Regulation Intensifies: Bipartisan Letter from Ten Members of Senate Banking Committee Urges Withdrawal of the IRS's Interest Reporting Regulation (Link to Senate letter below)

2) Rep. Eric Cantor, Member of the House Leadership, Expresses "Strong Opposition" to IRS Reg (Link to Rep. Cantor's letter below)

3) Competitive Enterprise Institute's President Fred Smith' letter to Treasury Secretary Snow opposing the regulation (Link to Mr. Smith's letter below)

October 23, 2003,, by Glen Shapiro, Opposition To IRS Reporting Regulation Intensifies


6) U.N. Resuscitates Tax Grab Proposal

When Thomas Jefferson stated that, "Eternal vigilance is the price of liberty," he must have foreseen the development of international bureaucracies.  The OECD suffers a big defeat, but the UN is trying to fill the vacuum by resuscitating its misguided effort to impose tax harmonization policies.

[Excerpt from Financial Times article]

The United Nations called yesterday for the creation of a global commission to strengthen dialogue between the developed and developing world on taxation policy.

"The growth of business conducted over the internet, of multinational corporations and of cross-border trade in services has had a host of ramifications regarding which national authorities should collect taxes on which activities," the UN said at the start of a two-day ministerial meeting in New York on aid, debt and international finance.

"There are limits to what individual governments can do about international tax evasion and tax avoidance; governments need to co-operate better to combat these problems."

While initiatives existed within the developed world, such as efforts by the Organisation for Economic Co-operation and Development (OECD), to eliminate harmful tax practices, Jose Antonio Ocampo, UN undersecretary-general for economic and social affairs, said the UN was the only forum for global dialogue on tax matters. [Link to full article below:]

October 30 2003, Financial Times, by Mark Turner, UN call to beef up forum on global tax policy


7) Cato: Threats to Financial Privacy and Tax Competition

The Cato Institute has released a study entitled the "Threats to Financial Privacy and Tax Competition". The Policy Analysis discusses how high tax nations and organizations such as the European Union are pressing for international agreements to remove limits on government abilities to collect data at the expense of prosperity and freedom. It shows how, in the name of the war against terrorism, many governments are attempting to gain more tax revenue through tax harmonization policies such as information exchange. It concludes that this policy diverts law enforcement from concentrating on individuals engaging in real criminal activities, while permanently undermining the freedoms of law-abiding citizens. Link to complete study below:

October 2, 2003, Cato Policy Analysis No. 491, "Threats to Financial Privacy and Tax Competition," by Richard W. Rahn and Veronique de Rugy


8) Coalition For Tax Competition Praises Congressman's Tax Fight

[Excerpt from article:]

The Center for Freedom and Prosperity along with more than thirty of America's free-market orientated organisations have united in their support for Congressman John E. Sweeney (R - NY) who is championing the country's opposition to international tax harmonisation schemes proposed by institutions such as the OECD (Organisation for Economic Cooperation and Development).

In a letter to Mr Sweeney written by the members of the CFP, the organisation expressed their support for the Congressman's cause: "Recent events have demonstrated that international bureaucracies often are hostile to US interests," stated the letter.

It continues: "We believe the tax harmonization and global taxation plans of the OECD and UN are bad tax policy – and we also believe that American taxpayers should not subsidize their statist agendas. If these bureaucracies insist on pursuing anti-free market tax policies, they should do so without any financial assistance from the United States"

 [Link to full article below:]

September 25, 2003,, by Mike Godfrey, Coalition For Tax Competition Praises Congressman's Tax Fight

Link to letter to Rep. Sweenry:

Link to press release:


9) WSJE: EU's Tax Changes Scatter Corporations: Switzerland, Ireland Draw Companies Seeking to Avoid a Rise in Obligations


A number of large multinationals -- mostly American -- have moved their European headquarters and finance operations out of traditional European Union locales to Switzerland and Ireland, aiming to avoid costs associated with so-called tax harmonization. That's the EU's term for its effort to end competitive tax breaks among member states, a practice Brussels regards as harmful.

The corporate moves, by such big names as John Deere, Ralph Lauren and General Mills, are starting to resemble the burst of migration by multinationals to Bermuda and other tax havens during the 1990s. They are also fueling concern among business boosters and revenue officials in some EU countries, particularly the Netherlands and Belgium, which are losing their luster as tax havens.

  High-tax France and Germany are suffering the most defections, but the phenomenon may also be spreading to the so-called Benelux region, whose business-friendly tax regimes have long made it the European base of choice for American multinationals. In the World Economic Forum's most recent annual report on global competitiveness, ratings for the Netherlands and Belgium plunged while they surged for Switzerland, a non-EU member. Tax lawyers say several U.S. firms in those countries are thinking of pulling up stakes.

October 9, 2003, Wall Street Journal – Europe, EU's Tax Changes Scatter Corporations: Switzerland, Ireland Draw Companies Seeking to Avoid a Rise in Obligations

Additional EU articles:

October 27, 2003,, by Jason Gorringe, Ireland Remains Europe's Lowest-Taxed State

October 27, 2003, Guernsey Press And Star, by Mark Oliphant, Guernsey Defends Savings Tax Directive Stance

October 26, 2003, Neue Zürcher Zeitung AG, by Jacob Greber, Cantons compete for the golden taxpayer: The German tennis ace Boris Becker is just one in a long list of well-heeled individuals attracted to Switzerland by low tax rates in some cantons

October 23, 2003, SwissInfo, Rightwing success threatens bilateral agreements

October 22, 2003, SwissInfo, Swiss rightwing pales alongside European extremes

October 21, 2003, SwissInfo, Rightwing power bid gathers momentum

October 21, 2003, The Daily Telegraph, By Ambrose Evans-Pritchard, Liberty groups attack plan for EU health ID card news/2003/10/21/ixworld.html

October 17, 2003,, Data retention plan in Europe unlawful? ws

October 17, 2003,, by Ulrika Lomas, Brown Urges Europe To Reject Moves Towards Tax Harmonisation

October 7, 2003, Wall Street Journal – Europe, By Angelo M. Petroni, Your Liberty Is at Risk: In the EU's New Constitution

October 2, 2003, German Celebrities Head to Tax Oasis Switzerland,3367,1433_A_984595_1_A,00.html


10) The Wall Street Journal: Bring It On Home


A common political gripe is that American corporations take business and jobs away from U.S. shores. Here's a radical thought: How about fixing the parts of the tax code that encourage them to keep their cash overseas?

That's the point of a proposal gaining traction in Congress to allow a one-year tax reduction on corporate income earned abroad. Instead of the usual U.S. tax rate of 35% that businesses pay on income earned by their foreign subsidiaries, companies would pay a 5.25% rate if they repatriate that income during a 12-month period.

We aren't usually fans of temporary tax proposals, and a broader reform that makes U.S. corporate taxes more competitive with the rest of the world would be preferable. But you can squander five lifetimes waiting for Congress to pass tax reform, and this idea would at least provide a one-time economic and revenue boost. It would also move the U.S. in the sensible direction of what's called a "territorial tax."

The U.S. is currently a rare country that taxes income earned anywhere at U.S. rates. Most countries allow income to be taxed in the places ("territory") where it's earned. The U.S. has tried to compensate by offering corporate tax credits for income earned and taxed abroad, but those credits have many restrictions and limits. The practical effect is that law-abiding American companies hold abroad tens of billions of dollars on which they've already paid foreign taxes and refuse to repatriate lest they get taxed again at that 35% U.S. rate. [Link to full article below:]

October 28, 2003, The Wall Street Journal, Bring It On Home


11) US Economists Praise International Tax Reform


In a letter to the chairman of the House Ways and Means Committee, Congressman Bill Thomas, 49 leading US economists praised reforms contained within Thomas' American Jobs Creation Act (HR 2896).

The signatories, who included representatives from think-tanks such as the American Enterprise Institute, The Heritage Foundation, and The Cato Institute, as well as from various universities throughout the country, explained that:

"We are writing to commend you for seeking to reform the tax treatment of international business income. Your proposed legislation, HR 2896, the "American Jobs Creation Act of 2003," takes important, fundamental steps towards a territorial, consumption-base tax system. This will improve the competitiveness of the US tax code and help create a level playing field for US-based companies. These changes will allow US firms to expand both domestically and internationally and will increase US employment."

The letter continued:

"In addition, we would like to recognize important provisions in your bill that lower the cost of capital, encourage investment and make another step forward towards a neutral, pro-growth tax code. Specifically, reducing the depreciation lives for equipment is a commendable step forward in the quest for a consumption-based tax system that allows investment to be immediately expensed."

October 14, 2003,, by Glen Shapiro, US Economists Endorse Jobs Creation Act

Link to letter:


12) Bob Barr:  Unfriendly bankers


Long gone are the days in which banks would compete for your business, even offering gifts in return for your giving them the privilege of using your money to make money for the bank. Gone also are the days when there was a degree of privacy, if not courtesy, you could expect from your bank, especially if you were a long-time customer. And now, gone are the days when the banks presumed their customers to be honest.

Now, thanks to the PATRIOT Act and the pervasive fear gripping all aspects of American life, banks view each customer as a potential criminal -- a threat, if you will, perhaps even one the bank unilaterally decides will no longer enjoy the privilege of banking with them for reasons they won't even tell the customer.

Some of this is not new. For several years, for example, banks have been required to report suspicious activity to the federal government via a -- you guessed it -- "Suspicious Activity Report." Customers can thank the drug war for this infringement on their financial privacy.

The latest intrusions go much further. As of Oct. 1, banks are required under the PATRIOT Act, passed in the immediate aftermath of 9/11, to require every customer, even those who have been customers in good standing for 20 years or more, to produce government-issued identification to open an account (even if they already have several). Some banks reportedly are requiring customers to produce their original Social Security card for this purpose! [Link to full article below:]

October 17, 2003, United Press International, by Bob Barr, Outside View: Unfriendly bankers


13) James Bovard: Americans' Financial Liberty Placed at Risk by Patriot Act


The Justice Department recently revealed that the Patriot Act is being routinely used to prosecute a wide array of non-terrorist offenses. While many Americans assumed that the Patriot Act only concerned terrorists, the reality is that the act poses a grave threat to Americans' financial privacy and property rights.

The Patriot Act makes it far easier for the feds to vacuum up Americans' financial records without a warrant. Banks are now required to gather far more information on their clients - their background, their sources of income, their financial behavior, etc. Money Laundering Alert, a pro-government newsletter, described one financial provision of the Patriot Act as a "dream-come-true information gathering tool for U.S. agencies," extending a "welcome mat to the Central Intelligence Agency, National Security Agency and other U.S. counterparts" to look at the new financial information on American citizens and others.

The Patriot act entitles the U.S. government to penalize anyone in the world who allegedly violates U.S. money laundering laws. If a foreign bank has a single dollar deposited or held in a U.S. bank, or wires a single dollar through the United States, the Bush administration claims jurisdiction over that bank's operations anywhere in the world. Treasury Department chief counsel David Aufhauser warned foreign economics ministers that "there will be hell to pay" for any nation that doesn't aid the U.S. war against terrorism.

The Justice Department is exploiting powers gained via the Patriot Act to confiscate millions of dollars from foreign banks operating in the United States in cases with no terrorist connections or allegations. The Justice Department used the Patriot Act to confiscate the bank accounts of Canadian telemarketers accused of fraud.

October 8, 2003, Investors Business Daily, by James Bovard, Americans' Financial Liberty Placed at Risk by Patriot Act m


14) Cato:  The Internet Tax Solution: Tax Competition, Not Tax Collusion

A heated debate is once again under way in Congress over the tax treatment of electronic commerce and the Internet Tax Freedom Act of 1997. The ITFA imposed a moratorium on state and local taxes on Internet access and banned "multiple or discriminatory" taxes on electronic commerce. That moratorium was intended to last only three years but was extended by Congress in 2001 for another two years. It will lapse on November 1, 2003.

The ITFA has been a remarkably misunderstood or misinterpreted statute and has very little to do with what really lies at the heart of this debate—the effort by state and local governments to collect sales and use taxes on remote vendors in interstate commerce (mail order, catalog, and e-commerce companies). Contrary to press reports and statements made by some members of Congress, the ITFA moratorium does not directly affect the ability of states and localities to impose sales and use taxes on purchases made over the Internet.

What state and local officials are really at war with is not the ITFA but 30 years of Supreme Court jurisprudence that has not come down in their favor. Their ultimate goal is to overturn those precedents, which held that states could require only firms with a physical presence—or "nexus"—in their jurisdictions to collect taxes on their behalf. State and local tax officials have worked to eliminate or water down these restrictions on their tax reach but thus far have not been able to get around them or convince Congress to authorize the imposition of collection obligations on interstate vendors.

October 23, 2003, Cato Institute Policy Analysis No. 494, by Adam D. Thierer and Veronique de Rugy, The Internet Tax Solution: Tax Competition, Not Tax Collusion


15)'s Jim Harper Comments before the Bank Secrecy Act Advisory Group of the U.S. Treasury


The Bank Secrecy Act, of course, is implicated by that first factor: power to control information. By requiring banks to retain certain records about customers, the BSA denies consumers the power to control personal information that their financial institutions may hold or derive. The BSA prevents banks from offering consumers privacy on the terms they may want it.

And the BSA's reporting requirements take things quite a bit further. Here, personal information is transferred to a government agency, which is not bound by contract or accountable to any higher authority if it makes new, unanticipated disclosures or uses of data. There may be details in the BSA that I don't know about, but most federal agencies can make new uses of information merely by declaring them in the Federal Register.

There are a variety of ways that governments deprive citizens of privacy, and the Bank Secrecy Act has elements of each. First, it is anti-privacy law. It says to consumers and financial institutions, "You may not get together and agree to keep financial arrangements private." Second, it is a surveillance program: the government is peering in on people's lives without their consent or participation. Finally, BSA reports go into a public record, and specifically a database. This causes the information to be uniquely persistent, transferable, copyable, and usable.

October 22, 2003,, Prepared Remarks of Jim Harper, Editor of, to the Bank Secrecy Act Advisory Group, U.S. Department of the Treasury


16) Hayek Institute and Von Mises Institute to host important conferences on tax policy

1) On November 12, the Brussels-based Von Mises Institute will host a "Tax Harmonization or Tax Competition?" conference. Speakers include Dan Mitchell of the Heritage Foundation and Mart Laar, former Prime Minister of Estonia. For more information, contact:

Annette Godart-van der Kroon
president of the Ludwig von Mises Institute Europe VZW     
Correspondence:  Herendreef 20, Leuven B-3001, Belgium
Tel. +032.(0)16.295833  ; Cellphone: +032.(0)479.722107
Fax. +032.(0)16.584568 ; E-mail:

2) On November 21-22, the Vienna-based Hayek Institute will host a "Austrian Economics Today II: Reforms for a Competitive Economy" conference. Speakers include Dan Mitchell of the Heritage Foundation and Andrei Illarianov, chief economic adviser to the President Putin of Russia. For more information, contact:

Ms. Huberta Konradsheim of The Hayek Institute at or +43/1/53451/376.
For further information please visit


17) CF&P Clips

October 29, 2003, The Washington Times, By Richard W. Rahn, Price controls can be lethal

October 26, 2003, The Washington Times, By Richard W. Rahn, A think tank oxymoron?

October 24, 2003, San Francisco Chronicle, By David Lazarus, Lazarus At Large: Privacy takes a backseat K1.DTL

October 24, 2003,, by Butler Shaffer, Property and Order

October 23, 2003, The Economist, Triumph of the pygmy state

October 21, 2003, Tech Central Station, By Jean Yves Naudet, French Fried

October 19, 2003, The Boston Globe, By Bruce Mohl, Theirs for the taking: sensitive credit data: Resale of reports depends on an honor system that goes unpoliced dit_data+.shtml

October 17, 2003, The Washington Times, By Richard W. Rahn, Curbing the appetite for spending

October 16, 2003, The Washington Times, By Audrey Hudson, Senators join forces to roll back parts of Patriot Act

October 14, 2003, The Boston Globe, By Stephen J. Glain, Shining a light on the `secret law' of the IRS of_the_IRS+.shtml

October 14, 2003, Caribbean Net News, British territories targeted by Inland Revenue 'hitmen'

October 11, 2003, The Standard (China), By Mukul Munish, Money flowing into emerging markets catid=1

October 8, 2003, National Center for Policy Analysis, by Bruce Bartlett, Unemployment and the 35-Hour Work Week


Best regards,

Andrew Quinlan
Center for Freedom and Prosperity


Did you like what you just read? If so, consider contributing to the Center for Freedom and Prosperity at:

Do you have a friend who might be interested in our e-mails? If so, forward it to them, or have them join our list at:

Return Home

[Home] [Issues] [Tax Competition] [European Union] [IRS NRA Reg] [Corporate Inversions] [QI] [UN Tax Grab] [CF&P Publications] [Press Releases] [E-Mail Updates] [Strategic Memos] [CF&P Foundation] [Foundation Studies] [Coalition for Tax Comp.] [Sign Up for Free Update] [CF&P At-A-Glance] [Contact CF&P] [Grassroots] [Get Involved] [Useful Links] [Search] [Contribute to CF&P]