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Center for Freedom and Prosperity's Weekly Update 3) Senate Votes to Protect Jurisdictional Tax Competition (in the U.S.) 4) CFP Warns The Bahamas, BVI and Jersey of OECD Misinformation 5) The OECD launches a new attack, calls for heavy regulation of business formation 7) The European Union: Less Growth, Fewer Jobs, and Higher Taxes 8) The Bahamas' Financial Service Legislation Ruled Unconstitutional
Our CFP Foundation study on why tax harmonization and information exchange is bad for America's competitive advantage (mentioned below) has received rave reviews. This new publication explains that the U.S. has the most to lose if the OECD, EU and UN anti-tax competition agendas succeed. We will be making a pilgrimage to Capitol Hill after we return from Miami to reinforce the findings of the study. Please note: Dan Mitchell and I will be at the CLAA annual conference in Miami next week. We have scheduled several meeting with private sector and public sector leaders from many of the OECD-persecuted jurisdictions. If you would like to meet with us on the OECD anti-tax competition issue, EU savings Directive, the IRS NRA regulation, the WTO FSC situation or any other issue, please e-mail me or call me at 202-285-0244. Dan and I will be in Miami all week, so we will have plenty of time for meetings. Please note Part II: My e-mailed crashed a week ago. I lost much of the e-mail I received after October 1. If you sent me something or had a question, please resend your e-mail. I try to respond to all requests. Thank you.
2) CFP Foundation: New Study Explains Why Tax Harmonization Threatens America's Competitive Advantage In Global Economy The Center for Freedom and Prosperity Foundation released a comprehensive study showing why tax harmonization is a threat to America's competitive advantage. Andrew Quinlan, President of the Center for Freedom and Prosperity, remarked, "This new study definitively explains why the tax harmonization and information exchange schemes of the Organization for Economic Cooperation and Development, the European Union, and the United Nations are a threat to America's interests." The report, entitled "The Adverse Impact of Tax Harmonization and Information Exchange on the U.S. Economy," is written by Heritage Foundation tax expert Daniel J. Mitchell. "The United States is a low-tax jurisdiction, the United States is a tax haven, and the United States is the world's biggest beneficiary of international tax competition," said Daniel Mitchell. "The overall tax burden in the U.S. is 29 percent of GDP, compared to 43 percent of GDP in the European Union. This enormous advantage helps explain why living standards in the U.S. are 50 percent higher than EU levels, why economic growth has been so much stronger in America over the past two decades, and why unemployment rates are so much lower in the United States." "Hopefully, this new report will make United States policy makers understand that the interests of the United States are not the same as the interests of countries like France or Germany," added Veronique de Rugy, Cato Institute policy analyst and Center for Freedom and Prosperity Board member. "Armed with this new information, we can expect even greater resistance from American policy makers to the anti-taxpayer proposals of the OECD, EU and UN." concluded Quinlan. CFP Foundation Study: CFP Press Release on Study: PDF version: NEWS CLIPS ON THE REPORT: November 29 2001, Bureau of National Affairs, by Myrna Zelaya-Quesada, Compliance With International Tax Efforts Could Damage U.S. Economy, Center Says November 28, 2001, Tax-News.com, US Group Rubbishes Tax Harmonization,
3) Senate Votes to Protect Jurisdictional Tax Competition (in the U.S.) On November 15 the U.S. Senate went on record in favor of tax competition between political jurisdictions, voting 57-43 to table an amendment that would have given U.S. states the authority to create an OECD-like tax cartel for the purpose of taxing transactions that take place outside their borders. This vote was a huge victory for supporters of tax competition. The issues in this debate are virtually identical to the issues revolving around the OECD and EU tax harmonization schemes. High-tax American states are upset that consumers are buying products from businesses in low-tax states. The high-tax states wanted businesses from low-tax states to participate in a mandatory "information exchange" system so they could tax any out-of-state purchases (much as the OECD and EU want "information exchange" to tax out-of-country investments). Fortunately, the US Senate voted to kill this misguided initiative. Link to BNA story below: Friday November 16, 2001, Bureau of National Affairs, By Bud Newman, Senate Passes, Sends President Bush Bill Extending Internet Tax Moratorium
4) CFP Warns The Bahamas, BVI and Jersey of OECD Misinformation CFP issued a confidential memo to public sector & private sector leaders in The Bahamas, British Virgin Islands and Jersey after we heard from reliable sources in Europe that the OECD was boasting that the three jurisdictions were about to capitulate. The following are two articles that respond to our memo. November 27, 2001, Stand Point (BVI), by Susan Henighan, Macthavious denies that territory is preparing to sign OECD agreement November 26, 2001, Tax-News.com, by Mike Godfrey, Bahamas Denies Readiness To Agree To OECD Demands 5) The OECD launches a new attack, calls for heavy regulation of business formation The OECD is now trying to impose massive new regulations on corporations by implying that they can be used for criminal purposes (cars can be used as getaway vehicles by bank robbers, so perhaps we can next expect the Paris-based bureaucrats to condemn the automobile). More specifically, the OECD has reissued (first issued in June) "Behind the Corporate Veil: Using Corporate Entities for Illicit Purposes." The purpose of this report, of course, is to target low-tax jurisdictions that attract a lot of business formation. Among the chief targets are the United States (particularly states like Delaware and Nevada), The Bahamas, Cayman Islands, Panama, and BVI. Link to OECD report:
The OECD, which has never been a great fan of tax cuts to stimulate economic performance, suggests the U.S. cut taxes on capital and income for everyone -- including the rich -- in order to get the world's economies back in a strong growth mode. It proposes a top income tax rate of 28 percent -- significantly lower than the current 39.6 percent rate. This sounds too good to be true, and it is. Yes, the OECD was forced to acknowledge reality and admit that high tax rates undermine growth, but the bureaucrats managed to contradict themselves. The very same report also called for the imposition of a VAT (wonderful, the US can be more like France), higher gasoline taxes, and a carbon tax. So what is the real story? Is the OECD for higher taxes or lower taxes? Probably the only thing we can say for certain is that the bureaucrats are certainly in favor of maintaining the tax-free status of their salaries. Below are excerpts from November 28, 2001, Investor's Business Daily, which discusses the OECD support for lower taxes and a link to the OECD study. [Excerpt] Source: Terry Jones, "A New Domino Theory: Industrial Economies Tumbling One by One," Investor's Business Daily, November 28, 2001; "Economic Survey on the United States - 2000," November 27, 2001, Organization for Economic Cooperation and Development. http://www.investors.com/ OECD Report:
7) The European Union: Less Growth, Fewer Jobs, and Higher Taxes We never though we would be highlighting a publication produced by the bureaucrats in Brussels, but the EU has a new publication that concisely explains that the EU is falling further and further behind the United States. Even more amusing, the report shows that the two EU nations doing the best are Luxembourg and Ireland, both of which have low-tax policies that cause considerable dismay for the tax-aholics in Berlin and Paris. Chapter Two from the European Competitiveness Report 2001 (PDF file linked below)
8) The Bahamas' Financial Service Legislation Ruled Unconstitutional The following is from Dr. Gilbert NMO Morris, Executive Director, The Nassau Institute (NI): "In the Supreme Court of the Bahamas yesterday, 27th November 2001, Justice Anita Allen ruled that "the Financial Intelligence Units (FIU) could not request the production of banking information from a licensee unless by court order", and sections of the Act empowering the FIUs to require banks to disclose depositor information were declared unconstitutional. "This is a limited victory, but a victory nonetheless in a case led by Bahamian barrister, Alfred Sears. These issues are part of the long-standing public position of The Nassau Institute (NI); which from the beginning advocated legal challenges to the new financial services legislation. This also reflects the work of Anton Keller of The Good Offices Group of European Lawmakers; Dr. Richard Rahn, and Daniel Mitchell of The Heritage Foundation and Mr. Andrew Quinlan. . . . " Link to full release below: November 28, 2001, The Nassau Institute (NI): Dr. Gilbert NMO Morris, The Bahamas' Financial Service Legislation Ruled Unconstitutional Press Clip on Decision: November 28, 2001, Miami Herald, By Tosheena Robinson, Accounts can't be frozen, Bahamas court decides: Ruling weakens government money laundering laws
November 29, 2001, Tax-News.com, by Mike Godfrey, US Government Sends In Top Official To Appeal Against WTO Ruling November 28, 2001, Tax-News.com, by Mike Godfrey, Goldman Sachs Joins Bermuda-Bound US Insurers November 28, 2001, Tax-News.com, by Mike Godfrey, US And Caymans Sign Tax Information Exchange Agreement November 26, 2001, Barbados Daily Nation, by Tony Best, THE BEST FILE: Caribbean turns to United Nations for help November 26, 2001, Forbes, By James Grant, Yes, But Blind seers November 22, 2001, Tax-News.com, by Amanda Banks, Caribbean Nations Renew Calls For Level Playing Field Over Tax November 22, 2001, Tax-News.com, by Ulrika Lomas, France Ready To Adopt Tobin Tax If EU Does The SameTax-News.com November 21, 2001, Reuters, New Laundering Rules to Include Brokerages November 21, 2001, The Daily Telegraph, By Robert Harris, Suppose we won the war but lost our freedom November 20 2001, Financial Times, By Canute James, Offshore finance centres hit at OECD November 20, 2001, Tax-News.com, by Mike Godfrey, United States Is Prime Destination For Laundered Cash, Says Report November 20, 2001, Tax-News.com, OECD Has Egg On Its Face, Says Lobbyist November 20, 2001, Financial Times, By Michael Peel and John Willman, INSIDE TRACK: The dirty money that is hardest to clean up: Financial institutions are keen to eradicate money-laundering by
terrorists and to freeze assets. But the task is fraught with difficulties, say Michael November 19, 2001, Money.Telegraph.co.uk, Gangster's paradise across the Atlantic November 19, 2001. EUObserver.com, Minister warns of 'Orwellian' police force November 19, 2001, The Moscow Times, by Russell Working, Offshore Banking Bothers November 19, 2001, Tax-News.com, by Justin Gorringe, Offshore Jurisdictions Worry About OECD Report November 18, 2001, The New York Times, by Robin Toner, Despite Some Concerns, Civil Liberties Are Taking a Back Seat November 17, 2001, Ananova, Becker accused of tax evasion November 17, 2001, The Miami Herald, Gregg Fields, Stricter rules could cost South Florida banks November 16 2001, Financial Times, By William Hall, SURVEY - SWITZERLAND: BANKING, FINANCE & INVESTMENT: Bankers' veil of secrecy begins to lift: The Swiss will aid criminal
inquiries, but will not yield to demands for tax information. The new spirit of openness has its limits, says William Hall November 15, 2001, Offshoreon.com, OECD Removes Demand that Tax Havens End 'Ring Fencing' October 11, 2001, Money.Telegraph.co.uk, By Harry de Quetteville, City 'a haven for laundered cash'
Best regards, Andrew Quinlan
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