Contact Information:

Center for
Freedom and Prosperity
 P.O. Box 10882
Alexandria, Virginia
22310-9998
202-285-0244

CF&P E-Mail Update,  November 19, 2003

Center for Freedom and Prosperity's E-mail Update

1) Rep Paul Ryan Becomes the 78th U.S. Lawmaker to Urge Withdrawal of Misguided IRS Interest Reporting Regulation

2) Mitchell Editorial explains why tax code should not punish companies for bringing overseas profits back to America.

3) Impressive Coalition of Free-Market Organization Endorse Repatriation of Foreign Profits

4) French President Pushes Global Tax Scheme, Working with OECD to Undermine American Interests

5) Tax havens provide refuge for the oppressed

6) Ronald Utt: Have the Tax Cuts Saved America from Eurosclerosis?

7) Is anyone surprised? European Commission To Launch New Push For Corporate Tax Harmonization

8) Milton Friedman Was (Is) Right!

9) Bruce Bartlett:  Flat-Tax Comeback: It's gaining popularity worldwide. Why not here?

10) The Patriot Act Under Siege

11) Tech Central Station: Courting International Law

12) Dan Mitchell to Speak at Washington Tax Competition Conference – December 9

13) CF&P Clips

 

1) Rep Paul Ryan Becomes the 78th U.S. Lawmaker to Urge Withdrawal of Misguided IRS Interest Reporting Regulation

Ways and Means Committee and Joint Economic Committee member, Wisconsin Congressman Paul Ryan, is the seventy-eight Member of Congress (18 Senators and 60 Congressmen) to urge for the withdrawal of the IRS's Interest reporting regulation.

[Excerpt from letter:]

There is no reasonable policy or administrative justification for requiring banks to report bank deposit interest paid to nonresident aliens.  Under the tax laws, bank deposit interest paid to nonresident aliens is not subject to U.S. tax. I understand that the objective of this proposed regulation is to promote voluntary compliance through the sharing of nonresident alien bank deposit information with other countries. Such an objective unnecessarily imposes additional reporting requirements on banking institutions and does not further any revenue collection purpose. [Link to full letter below:]

Rep. Ryan's letter:
http://www.freedomandprosperity.org/ltr/ryan-irs/ryan-irs.shtml

Link to complete list of opposition to regulation:
http://www.freedomandprosperity.org/against-irsreg.pdf

Link to CF&P's Dedicated IRS Interest Reporting Regulation Web Page:
http://www.freedomandprosperity.org/update/irsreg/irsreg.shtml

 

2) Mitchell Editorial explains why tax code should not punish companies for bringing overseas profits back to America.

[Excerpt]

Our tax code has many ridiculous features, but the booby prize may belong to a provision that discourages companies from investing profits in America and instead encourages them to keep money overseas. It's a 35 percent tax penalty imposed on U.S. companies that dare to take money they earn in other nations and plow it back into our economy.

Thankfully, Congress is considering whether to dramatically — albeit temporarily — reduce this penalty.

Members of both parties are sponsoring this proposal, known as the Homeland Investment Act. Republicans like the legislation because it would lower the tax burden and boost economic growth. Democrats like the idea because it has almost no effect on government revenues and might even boost tax collections, according to experts at PricewaterhouseCoopers.

How can a proposal simultaneously lower tax burdens and increase tax revenues? Simply stated, the 35-percent tax penalty on repatriated profits is so high that companies keep most of this money offshore; the government collects very little. But if the tax rate were slashed to 5.25 percent, as advocates propose, corporations would bring funds back to America, and the government would get a piece of the action.

But giving the government more money to spend is the last reason to support this proposal. More importantly, it's a step toward good tax policy, and better tax policy will improve the economy's performance. [Link to full article below:]

November 13, 2003, National Review Online, By Daniel J. Mitchell, Back Home Again: Lowering repatriation taxes would return profits to the U.S.
http://www.nationalreview.com/nrof_comment/mitchell200311130858.asp

Mitchell's editorial also appears in the Washington Times:

November 4, 2003, The Washington Times, By Daniel J. Mitchell, Illogical investment penalty
http://www.washtimes.com/commentary/20031103-100449-7767r.htm

 

3) Impressive Coalition of Free-Market Organization Endorse Repatriation of Foreign Profits

[Excerpt from Coalition letter]

We believe the U.S. economy is poised for stronger economic growth because of your Jobs and Growth Tax Reduction Act. By reducing marginal tax rates on work, saving and investment, the Jobs and Growth Act has boosted equity values, restored investor confidence, supported consumption and set the stage for a recovery in business investment spending. A strong and broad-based recovery in the U.S. business sector is essential to reducing unemployment in the months ahead.

We believe that the "Invest in U.S.A. Act," pending bipartisan legislation to temporarily reduce obstacles to corporate repatriation of foreign earnings would have an unambiguously positive impact on growth and job creation. Specifically, by reducing for one year the current 35 percent tax on foreign earnings to 5.25 percent, this legislation would lead to an influx of hundreds of billions of capital into the U.S. in 2004, thereby increasing the available funds for capital spending, corporate debt restructuring, increased contributions to under-funded pensions and other productive. [Link to coalition letter:]
http://www.atr.org/pdffiles/102103l-USA.pdf

 

4) French President Pushes Global Tax Scheme, Working with OECD to Undermine American Interests

The French government has set up a new body designed to advance the cause of global taxation. This is the quirky idea to fund international bureaucracies with big new taxes on financial transactions or energy consumption. French involvement in this proposal is not a surprise, but it is startling to see that the OECD is participating in this anti-market scheme. According to the French government, a senior OECD economist is a member of this radical panel - more evidence that the OECD is fundamentally hostile to US interests.

[Excerpt from BNA, www.bna.com]

PARIS--French President Jacques Chirac announced Nov. 7 the creation of a new working group charged with studying the feasibility of creating a global tax system to fund development projects.

Formation of the new working group makes good on a pledge dating to August 2002, when Chirac vowed to put the weight of the French presidency behind a wide-ranging study into whether international taxation could provide a counter-balance to the ongoing globalization of the world economy.

The new working group is led by French Finance Ministry official Jean-Pierre Landau, and counts members including government officials, private sector executives, top economists, representatives of multilateral institutions including the Organization for Economic Cooperation and Development and the World Bank, and nongovernmental organizations in the development sector.

Notable among the NGO participants is ATTAC, a French anti-globalization group that leads the international campaign for imposition of a so-called Tobin Tax on cross-border financial transactions to fund development. [Link to full article below:]

November 10, 2003, The Bureau of National Affairs, By Lawrence J. Speer, French President Forms Working Group To Study Global Taxation for Development
http://www.freedomandprosperity.org/Articles/bna11-10-03/bna11-10-03.shtml

 

5) Tax havens provide refuge for the oppressed

[Excerpt]

The European Union shares American concerns about tax havens. In an effort to track down Europeans who hide money overseas, EU officials tout a Savings Tax Directive that would mandate exchanges of information between nations about accounts held by nonresidents. With the information in-hand, tax authorities could hunt down funds cached around the world.

Oddly, though, one of the offending tax havens targeted by the EU is the U.S. How's that? Isn't the U.S. government dedicated to battling outlaw nations which ally themselves with tax evaders?

Well, it turns out that "tax havens" are in the eye of the beholder. In a recent article about the tax-haven controversy, Charles Adams, author of "For Good and Evil," a history of taxation around the world, defined a haven as "a kind of economic sanctuary, a modern city of refuge for those oppressed with the fiscal laws of their homeland."

Adams compared the refuge offered by tax havens with the sanctuary that Canada offered American draft resisters who opposed the Vietnam War. Like those young men, modern tax resisters flee something that they find oppressive -- in this case, government officials with a taste for other people's money.

"The U.S. tax burden is dramatically lower than that of the EU, representing 29% of GDP, compared to the EU's 42% average," points out John Blundell of Britain's Institute of Economic Affairs. This makes the U.S. a tax haven, relative to Europe. "Partly as a consequence," says Blundell, "the record for annual foreign investment into America -- a key determinant of recent U.S. prosperity -- has been broken on an almost monotonous basis." [Link to full article below:]

November 2003, Free-Market.net, Tax havens provide refuge for the oppressed
http://www.free-market.net/spotlight/taxhavens/

Supporting articles:

September 4, 2002, LewRockwell.com, by Charles Adams, An Historian Looks at Tax Havens
http://www.lewrockwell.com/orig2/adams2.html

May 30, 2002, Cato Institute, EU Savings Tax Directive A Tax Cartel In Disguise, Cato Expert Says
http://www.cato.org/new/05-02/05-30-02r.html

March 1991, National Center for Policy Analysis, by Gerald W. Scully, Tax Rates, Tax Revenues and Economic Growth
http://www.ncpa.org/studies/s159/s159.html

 

6) Ronald Utt: Have the Tax Cuts Saved America from Eurosclerosis?

A very good paper from the Heritage Foundation's Ron Utt showing how the US and other low-tax nations are out-performing Europe's welfare states.

[Excerpt]

As the 2004 presidential campaign gets underway, some of President George W. Bush's challengers have attempted to link his policy of aggressive tax cuts with the nation's lackluster economy since the terrorist attack on September 11, 2001. Most of the challengers have gone so far as to promise that, if elected, they will reverse some or all of the enacted and planned reductions in federal income taxes.

. . . The implied notion that tax increases contribute to economic vitality would come as a surprise to many European governments that are now moving to adopt American-style economic policies, because these policies have yielded dramatically superior American economic performance compared to European economic performance. The most recent data indicate that America's gross domestic product (GDP) grew more than 12 times faster than the GDP of the combined European economies over the 12 months ending in June 2003.

. . . America's comparatively better-than-average performance over the past year (from July 2002 through June 2003) comes as no surprise to advocates of the President's tax relief initiatives. In late April 2001, The Heritage Foundation estimated that President Bush's tax cut plan would increase economic growth by an average of 0.2 percent per year and reduce the average unemployment rate over the period by 0.2 percent compared to what otherwise might have occurred in the absence of significant tax relief.

Taxes were cut again in early 2003, and many economists attribute the brighter economic outlook for the next several years to the President's second round of cuts. [Link to full study below:]

November 7, 2003, The Heritage Foundation Backgrounder, by Ronald D. Utt, Have the Tax Cuts Saved America from Eurosclerosis?
http://www.heritage.org/Research/Taxes/BG1702.cfm

 

7) Is anyone surprised? European Commission To Launch New Push For Corporate Tax Harmonization

[From LawAndTax-News.com:]

According to an AFX Press report published at the weekend, the European Commission is set to launch a new campaign, spearheaded by Internal Markets Commissioner, Frits Bolkestein, for the harmonisation of corporate taxes across the EU.

The report suggested that the EC plans to unveil the proposals, which it will argue will improve the situation of multinational businesses by allowing them to calculate their taxable profits for all EU operations according to a common set of rules, at a meeting next Tuesday (November 25).

However, such a plan is likely to be strongly resisted by member states such as the United Kingdom and Ireland, which have traditionally been opposed to any form of tax harmonisation.

 November 18, 2003, LawAndTax-News.com, by Ulrika Lomas, Bolkestein To Launch New Push For Corporate Tax Harmonisation
http://www.tax-news.com/asp/story/story.asp?storyname=14103

Additional EU articles:

November 18, 2003, BBC News, EU accounts fail to pass muster: The European Union's court of auditors has failed to give EU accounts a clean bill of health for the ninth year.
http://news.bbc.co.uk/2/hi/europe/3279675.stm

November 17, 2003, Business Week, By John Rossant, How Europe Could Grow Again: The European experiment was supposed to deliver prosperity. It hasn't. But with less reform than you might think, a healthy new economy could emerge.
http://www.businessweek.com/magazine/content/03_46/b3858014.htm

November 6, 2003, Tax-News.com, by Jason Gorringe, Brown Reiterates Opposition To European Tax Harmonisation
http://www.tax-news.com/asp/story/story.asp?storyname=13959

November 5, 2003, Truth News, by Scott Stearns, EU Warns of Multi-Billion Dollar Sanctions Against US
http://www.truthnews.net/daily/2003110037.htm

October 29, 2003, Citizens for a Sound Economy, by Max Pappas, Europe's Global Tax: Europe is forcing American companies to collect taxes for it.
http://www.cse.org/informed/issues_template.php/1609.htm

January 2, 2003, The Cato Institute Project on Social Security Choice, by William G. Shipman, Retirement Finance Reform Issues: Facing the European Union
http://www.socialsecurity.org/pubs/ssps/ssp-28es.html

 

8) Milton Friedman Was (Is) Right!

[Excerpt]

TWENTY-FIVE years ago, I took my first economics class. Like many other college students, I wanted to understand why the economy of our teenage years was such a scary mess, with inflation and rising taxes eroding our parents' paychecks, interest rates soaring and unemployment an ever present threat.

By my freshman year, inflation had morphed into "stagflation," combining rising price levels with relatively high unemployment. For most economists, stagflation was a puzzle. There was supposed to be a trade-off -- the so-called Phillips curve -- between inflation and unemployment. If you had one, you weren't supposed to have the other.

The "Great Inflation" of the 1970's challenged and permanently altered economic theory. It vindicated the once-controversial analysis of Milton Friedman, then at the University of Chicago. [link to full article below:]

November 6, 2003, The New York Times, By Virginia Postrel, Economic Scene; With Milton Friedman's ideas now accepted by theorists and policy makers, it's easy to forget how revolutionary they were.
http://www.freedomandprosperity.org/Articles/nyt11-06-03/nyt11-06-03.shtml

 

9) Bruce Bartlett: Flat-Tax Comeback: It's gaining popularity worldwide. Why not here?

[Excerpt]

The flat tax is making a comeback. Banished to the political wilderness after Steve Forbes made it the central issue of his losing presidential campaign in 1996, interest is perking up again. One of the Democrats running for president could do himself (or herself) a lot of good by bringing it back.

The immediate cause for renewed interest in the flat tax is an order by Paul Bremer, administrator of the Iraqi Provisional Authority, establishing a 15 percent flat-rate tax in that country. The order was signed on September 19 and takes effect on January 1. A November 2 report in the Washington Post said that Bremer's action was sparking a new drive among those like Forbes to revive the issue here.

Actually, the Post didn't quite get the story right. Bremer's order merely says the following: "The highest individual and corporate tax rates for 2004 and subsequent years shall not exceed 15 percent." While the intent may have been to have a single 15 percent rate, the order does not preclude progressive rates up to 15 percent. Moreover, because the tax base is not specified, one could easily create effective tax rates well above the statutory maximum by allowing multiple taxation of the same income.

While advocates of the flat tax are, nevertheless, pleased with the Iraqi initiative, they are actually much more excited by what is going on in many former Soviet bloc countries. Estonia established a flat tax in 1994, Latvia in 1995, and Russia in 2001. Earlier this year, Ukraine adopted a flat tax beginning next year, and on October 28 Slovakia became the latest country to do so. China is said to be interested as well. [Link to full article below:]

November 10, 2003, National Review Online, by Bruce Bartlett, Flat-Tax Comeback: It's gaining popularity worldwide. Why not here?
http://www.nationalreview.com/nrof_bartlett/bartlett200311100918.asp

Additional flat tax articles:

November 10, 2003, The Heritage Foundation, by Dan Mitchell, If a Flat Tax is Good for Iraq, How About America?
http://www.heritage.org/Press/Commentary/ed111003c.cfm

 

10) The Patriot Act Under Siege

[Excerpt]

The Patriot Act's curious voyage has finally drifted into the estuary where hysteria meets abject ignorance in a pronouncement by none less than David Stern, commissioner of the National Basketball Association. Asked if league meal ticket Kobe Bryant should play despite the cloud of sexual-assault charges, Stern responded to the Los Angeles Times with bumper-sticker eloquence: "Absolutely," he blathered, because "[w]e don't have a Patriot Act in the NBA. That means that you're innocent until proven guilty."

The NBA being our pop panacea, Stern will doubtless instruct more Americans about the Patriot Act than attorney general John Ashcroft reached during his recent whistle-stop tour. Even if Ashcroft could be heard above the din, it hardly matters. After two years of mindless scalding by the organized defense bar and its law-school and media allies, the AG is radioactive — they have made him Ken Starr II; the mere mention of his name provokes a Pavlovian reaction that overwhelms his message. That might be of little moment were this your average political catnip. But this is not about putting the Internet in every classroom (so your children don't have to do all their Eminem downloading at home), or "a thousand points of light" (so you'll know Republicans feel your pain too). It is about national security and what law enforcement must be able to do to ensure the order on which liberty depends. [Link to full article below:]

November 13, 2003, National Review Online, By Andrew C. McCarthy, The Patriot Act Under Siege: Americans need to understand it before we add to it.
http://www.nationalreview.com/comment/mccarthy200311130835.asp

Additional privacy articles:

December 2003, PC World, By Bill Wallace, The Patriot Act Reconsidered: Next round of antiterrorist legislation seeks to balance privacy and security
http://www.pcworld.com/news/article/0,aid,113247,00.asp

November 2003, Reason Online, by John Berlau, Show Us Your Money: The USA PATRIOT Act lets the feds spy on your finances. But does it help catch terrorists?
http://www.reason.com/0311/fe.jb.show.shtml

November 17, 2003, Washington Post, Visa Hassles
http://www.washingtonpost.com/wp-dyn/articles/A50127-2003Nov16.html

November 14 2003, Silicon.com, by Jo Best, The government is watching you - official
http://www.silicon.com/0,39024729,39116907,00.htm

November 12, 2003, The New York Times, By Eric Lichtblau, F.B.I.'s Reach Into Records Is Set to Grow
http://www.nytimes.com/2003/11/12/politics/12RECO.html

November 12, 2003, Wired.com. By Ryan Singel, Post Office Gets Pressured to Pry
http://www.wired.com/news/privacy/0,1848,61140,00.html

November 5, 2003, Las Vegas Review-Journal, PATRIOT ACT: Law's use causing concerns: Use of statute in corruption case unprecedented, attorneys contend
http://reviewjournal.printthis.clickability.com/pt/cpt?action=cpt&expire=&urlID=8164533&fb =Y&partnerID=565

November, 2003, A Special Report Issued by Privacilla.org, Affiliate-Sharing and Consumers: How "Privacy" Regulation Misses the Mark, Hits Marketing
http://www.privacilla.org/releases/Affiliate-Sharing_Report.html

 

11) Tech Central Station: Courting International Law

[Excerpt]

Lost in the hoopla over the Supreme Court's decisions last term on affirmative action and gay rights is the development of a disturbing new legal trend, one hinted at by Justice Sandra Day O'Connor in a speech last week.

Increasingly, it seems, the Court is relying on international law and opinion as the basis for domestic legal decisions. For an institution that puts so much stock in precedence, this move is, well, unprecedented. Worse, it spells potential trouble down the road.

In several of its highest-profile cases, the Court looked for guidance from, among other bodies, the European Council for Human Rights and the United Nations. For the first time, these authorities are being granted as much or more weight as American laws, or even the Constitution, in the Court's decisions. This represents a serious abuse of the Supreme Court's judicial review responsibility, as well as its role as the ultimate arbiter in our legal system. [Link to full article below:]

November 4, 2003, Tech Central Station, By Sandy Schulz, Courting International Law
http://www.techcentralstation.com/110403A.html

 

12) Dan Mitchell to Speak at Washington Tax Competition Conference – December 9

International Tax Policy Forum/American Enterprise Institute conference on "Competition vs. Cooperation in Global Tax Policy"

Info on conference:

With increasing integration of world economies, international tax competition has taken greater importance in the formation of domestic and international policy. This conference will evaluate the evidence regarding international tax competition and the implications for taxpayers and governments. Panelists will consider the latest developments in tax rate-setting among nations, particularly the extent to which governments may have shifted their reliance on different types of taxes in response to competitive international pressures. New evidence on the responsiveness of foreign direct investment to international tax rate differences will be reviewed. Recent multilateral tax initiatives, including those adopted by the European Union and others advanced by the Organization for Economic Cooperation and Development, will be discussed in the light of this evidence and analysis.

Tuesday, December 9, 2003 
8:50 AM to 3:15 PM

ITPF / AEI conference
Wohlstetter Conference Center, Twelfth Floor, AEI
1150 Seventeenth Street, N.W., Washington, D.C. 20036

Link to conference registration:
http://www.aei.org/events/type.upcoming,eventID.676,filter./event_detail.asp

 

13) CF&P Clips

November 16, 2003, The Washington Times, By Richard W. Rahn, Betting on Bulgaria
http://www.washingtontimes.com/commentary/20031115-114758-2215r.htm

November 16, 2003, Cato Institute, by Stephen Moore, Where's the Fiscal Outrage?
http://www.cato.org/dailys/11-16-03.html

November 13, 2003, The Economist, Fanning the flames of liberty
http://www.economist.com/agenda/displayStory.cfm?story_id=2208196

November 12, 2003, The Washington Times, By Lawrence Kudlow, The dissonance of harmony
http://www.washingtontimes.com/commentary/20031111-085315-3654r.htm

November 7, 2003, LawAndTax-News.com, by Glen Shapiro, US Tax Court Rules On New Jersey Corporate Taxes
http://www.tax-news.com/asp/story/story.asp?storyname=13984

November 6, 2003, The Washington Times, By Richard W. Rahn, When Uncle Sam owns the land
http://www.washingtontimes.com/commentary/20031105-093417-6063r.htm

November 1, 2003, Neue Zürcher Zeitung AG, Money laundering laws face new challenges: Switzerland's laws on money laundering need to be adapted to keep pace with new ways of washing dirty money.
http://nzz.ch/2003/11/01/english/page-synd4397324.html

Fall 2003, The Independent Review, by Niclas Berggren, The Benefits of Economic Freedom: A Survey
http://www.independent.org/tii/media/pdf/tir82berggren.pdf

October 24, 2003, Citizens for a Sound Economy, by Dick Armey, Freedom and Tort Reform

http://www.cse.org/informed/issues_template.php/1598.htm

February 1, 2003, The Bahamas Post, by Daniel J. Mitchell, The Bahamas Should Reclaim It's Sovereignty and Restore It's Flagging Economy: Time to Stiff-Arm the OECD
http://www.bahamaspost.com/article.asp?ID=2

 

Best regards,

Andrew Quinlan
Center for Freedom and Prosperity
President
202-285-0244
quinlan@freedomandprosperity.org
www.freedomandprosperity.org

__________________________

Did you like what you just read? If so, consider contributing to the Center for Freedom and Prosperity at:
https://secure.chargedcontribution.com/cfp/default.asp?s=true&r=c&ref=cfp

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:
http://www.freedomandprosperity.org/update/update.shtml

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]