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CF&P E-mail Update, December 5, 2005

Center for Freedom and Prosperity's E-mail Update

1) OECD Tax Harmonization Scheme Stymied at Australian Global Forum

2) OECD Bait-and-Switch Tactic Unlikely to Rescue Faltering Tax Harmonization Scheme

3) Paris-based bureaucracy seeks to undermine America

4) News Coverage of Center's Forum in New Zealand

5) Dick Armey urges GOP to rediscover principles

6) The continuing global shift to lower taxes

7) Inflation is caused by government

8) The battle to protect the Internet from the U.N. is not over

9) Weak-kneed financial services association comments on OECD hypocrisy

10) Dan Mitchell on a Flat Tax System in the Australian


1) OECD Tax Harmonization Scheme Stymied in Australia: Most Low-Tax Jurisdictions Hold Firm on Level Playing Field Demand, Other Jurisdictions Reject the Tax Cartel Altogether

[Excerpt from CF&P Press Release:]

The Organization for Economic Cooperation and Development's "harmful tax competition" project suffered another setback this week as low-tax jurisdictions refused to acquiesce to the Paris-based bureaucracy at a November 15-16 Global Forum in Melbourne, Australia.  The OECD had hoped that so-called tax havens would agree to emasculate their attractive policies in order to help high-tax nations stop the flow of jobs and capital to low-tax nations.

     The OECD's anti-competition project began in the 1990s and resulted in the release of a "tax haven" blacklist in 2000, a move that was widely criticized since many OECD nations – including Luxembourg, Switzerland, the United Kingdom, and the United States – conveniently were omitted from the list even though they were tax havens according to the OECD's own definition. Battered by accusations of discrimination, the Paris-based bureaucracy suffered a defeat as it was forced to agree that low-tax jurisdictions were not obliged to surrender their fiscal sovereignty unless OECD member nations agreed to abide by the same misguided policies. This is the famous "level playing field" condition.

     Incurring another defeat, the OECD then was forced to unofficially expand its tax haven blacklist at the 2004 Berlin Global Forum – thus creating an even bigger list of jurisdictions that would have to agree to bad policy in order to achieve a level playing field. [Link to full article below:]

November 16, 2005, CF&P Press Release


2) OECD Bait-and-Switch Tactic Unlikely to Rescue Faltering Tax Harmonization Scheme

[Excerpt from CF&P Press Release:]

The Organization for Economic Cooperation and Development's (OECD) anti-tax competition campaign has been stymied ever since persecuted low-tax jurisdictions correctly insisted that they should not be obliged to eviscerate their attractive domestic policies unless OECD member nations agreed to abide by the same misguided rules. This creates a quandary for the Paris-based bureaucracy since nations such as Luxembourg, the United States, Austria, Switzerland, Belgium, and the United Kingdom also are "tax havens" according to the OECD's own definition. Nonetheless, the OECD is hoping to overcome this roadblock at the November 15-16 Melbourne Global Forum.

     Supporters of economic liberalization are in Melbourne to help fight against the OECD's campaign, and they offered the following comments:

     Andrew Quinlan, President of the Center for Freedom and Prosperity Foundation, explained: "Not a single member nation of the OECD has offered to eliminate – or even alter – its tax haven policies. Yet the OECD won't even admit that its original blacklist was based on a discriminatory decision to target only non-OECD jurisdictions." [Link to full article below:]

November 15, 2005, CF&P Press Release


3) Paris-based bureaucracy seeks to undermine America

The Organization for Economic Cooperation and Development is an international bureaucracy controlled by high-tax European welfare states. As such, the OECD pursues left-wing initiatives such as a campaign against "harmful tax competition." According to the Paris-based bureaucracy, it is unfair for jobs and capital to escape fiscal hell-holes like France and Germany and migrate to less oppressive jurisdictions such as Hong Kong, Switzerland, Ireland, and the United States. But this is hardly big news. As John Berlau notes in Human Events, the OECD routinely proposes big-government policies that would hurt America. What is big news, by contrast, is the fact that American taxpayers are paying one-fourth of the OECD's bloated budget. In other words, American taxpayers are paying bureaucrats in France (who pay no tax, by the way) to advocate higher taxes on the United States.

[Excerpt from Human Events Online]

..the free-market policies of the U.S....could be put at risk by the...the Organization for Economic Cooperation and Development. ...the Paris-based OECD is dominated by the nations of Old Europe. Founded in the 1960s as an academic group that primarily researched economic development, the body has transformed itself in the past few years into a sort of booster organization for the high-tax high-regulation policies of European Union nations. As Dan Mitchell, economist and senior fellow at the Heritage Foundation has said, OECD seeks to "create an OPEC for politicians" by hindering countries from lowering their taxes and regulatory barriers....An OECD official complained a few years ago that tax competition "may hamper the application of progressive tax rates and the achievement of redistributive goals." ...The OECD's 2005 Economic Survey of the United States urged that the U.S. adopt a European-style value-added tax (VAT)... Groups like the OECD attempt to short-circuit this competition through a process that now-United Nations Ambassador John Bolton referred to as a "worldwide cartelization of governments and interest groups." Writing in the Chicago Journal of International Law in 2000, Bolton asserted that "the costs to the United States" in "reduced constitutional autonomy ... and limitations on our domestic and foreign policy options and solutions are far too great ... to be acceptable." [Link to full article below:]

Posted November 16, 2005, Human Events Online, by John Berlau, Is U.S. Embracing a Global Tax Scheme?


4) News Coverage of Center's Forum in New Zealand

November 25, 2005, TV New Zealand, More argument for tax cuts

November 22, 2005, TV New Zealand, Tax cuts call not a burp: meeting


5) Dick Armey urges GOP to rediscover principles

The former House Majority Leader writes in the Wall Street Journal that voters are turning away from the Republican Party because GOP politicians are acting like big-spending leftists. Armey says that the time has come for another 1994 revolution. But this time, conservatives need to wrest power from big government Republicans, not big government Democrats.

[Excerpt from the Wall Street Journal]

Our base rightly expects Republicans to govern by the principles -- lower taxes, less government and more freedom -- that got them elected. Today, with Republicans controlling both the legislative and executive branches of the federal government, there is a widening credibility gap between their political rhetoric and their public policies. What will happen to Republicans if these freedom-loving, grassroots activists don't show up for work next fall? The elections earlier this month may be an indication of the answer. ...As the party of smaller government, Republicans will always have a more difficult job governing than Democrats do. Government naturally wants to expand. It is always easier for politicians when both you and your political base truly believe that there is a new government program to solve any problem, real or imagined. We will always have to work harder and be more entrepreneurial than our political opponents when it comes to implementing reforms. To succeed in the future, the Republican Party must get back to basics. We need, in effect, another Republican takeover of Congress, reaffirming a commitment to less government, lower taxes and more freedom. As in 1994, this revolution will be driven by the young Turks of the party -- the brave backbenchers more inspired by Reagan than the possibility of a glowing editorial on the pages of the New York Times. [Link to full article below:]

November 29, 2005, The Wall Street Journal, By Dick Armey, It's My Party . . .   (subscription required)


6) The continuing global shift to lower taxes

Only Americans celebrate Thanksgiving, but the rest of the world should pause for a moment and give thanks to tax competition. Thanks to globalization, it is increasingly easy for labor and capital to cross national borders in order to avoid punitive taxes. This process is forcing governments around the globe to lower tax rates and reform oppressive tax systems. In recent days, Spain's socialist government has announced a cut in its corporate tax rate, Ireland's government has announced that it intends to preserve its low 12.5 percent corporate tax, Colombia has announced that it will lower its corporate tax rate by more than 8 percentage points, and Russia has announced it will continue its tax-cutting crusade by reducing a number of levies - including a possible reduction of the corporate tax rate to 20 percent so that it is closer to the 13 percent flat tax that exists for individuals.

[Excerpt from on Spain]

Spanish Prime Minister José Luis Rodríguez Zapatero has announced that his government is seeking to steer through cuts in taxation for both small and large companies which could go into effect from next year. In an attempt to bring Spanish company taxes more into line with international rates, Mr Zapatero stated at an event organised by The Economist magazine in Madrid on Monday that taxation on small companies will be reduced to 25% and for large businesses to 30%. ...Mr Zapatero also announced that the government intends to reform the personal income tax system to "reduce fiscal pressure on earnings" and to make taxation "simpler and fairer".

[Excerpt from on Ireland]

With Ireland's company tax policy seemingly under attack from various quarters, Minister for Enterprise, Trade and Employment Míchéal Martin told a conference in Australia this week that the government has no intention of increasing its flagship 12.5% rate of corporate tax. "To be quite clear about this, the Irish corporate tax rate has been a key cornerstone of our economic policy - getting that tax rate down to 12.5pc and keeping it there...," Mr Martin stated during an Enterprise Ireland mission to Australia. ...As if the Irish government needed reminding that an increase in corporate tax is unlikely to be well received by the large number of multinationals which have established operations in Ireland, Dell chief executive, Kevin Rollins warned in an interview with the Sunday Business Post at the weekend that the computer giant would consider relocating if corporate taxes in the Republic increase. "Any time a cost goes up, we will reassess our position, particularly with tax," he said.

[Excerpt from on Colombia]

Colombia last week said it is planning to cut corporate tax from 38.4% to under 30% by the end of the year in order to spur investment. Finance Minister Alberto Carrasquilla said the government will ask Congress to reduce the tax rate, which is currently one of the highest rates of corporate tax in the region. Businesses have repeatedly begged the government to reduce the tax rate to encourage both local and foreign investment in the country."In Colombia, the rate is the highest in Latin America and it dissuades the investment's growth to be as high as in other countries in the region," said Eugenio Marulanda, head of the Confecamaras, a business grouping. Carrasquilla said the government agrees with the business community.

[Excerpt from on Russia]

Russian President Vladimir Putin has stated that the government remains committed both to simplifying tax legislation and reducing the tax burden... "All our plans in this sphere have one aim - to reduce the tax burden," Mr Putin told business leaders during his recent visit to Japan. According to the President, taxation as a share of the Russian economy, at 34% to 35% of GDP, is lower than in Western Europe where the average is about 40%. However, he went on to add that the government still plans to "reduce this yet further"... Since 2002, the Putin administration has reduced and abolished a number of taxes, including turnover tax, payroll taxes, sales tax, and value added tax, which was recently cut to 18% from 20% and could be reduced to as low as 13% in the coming years. Deputy Finance Minister Sergei Shatalov told reporters on Wednesday that a proposal to cut profit tax to 20% from 24% will also be put on the table within the next two years.

November 23, 2005,, by Ulrika Lomas, Spanish Government To Cut Company Tax

November 23, 2005,, by Jason Gorringe, Irish Government On The Defensive Over Corporate Tax

November 2005,

November 24, 2005,, by Tatiana Smolenskaya, Russia Will Continue To Reduce Its Tax Burden, Says Putin


7) Inflation is caused by government

Walter Williams uses his column to explain that inflation is always the fault of bad monetary policy by government. Policiticians periodically try to shift the blame to some other entity, but this is nonsense. Yes, businesses like to charge high prices. Yes, unions like to get fat contracts. And yes, OPEC nations like high oil prices. But none of these actions - even if successful - are capable of causing a generalized increase in the aggregate price level. That only occurs when too much money is chasing too few goods, and that only happens when governments mismange the money supply.

[Excerpt from Dr. William's column]

...let's not let politicians deceive us, and escape culpability, by defining inflation as rising prices, which would allow them to make the pretense that inflation is caused by greedy businessmen, rapacious unions or Arab sheiks. Increases in money supply are what constitute inflation, and the general rise in the price level is the result. Who's in charge of the money supply? It's the government operating through the Federal Reserve. [Link to full article below:]

November 16, 2005,, by Walter E. Williams, What's inflation?


8) The battle to protect the Internet from the U.N. is not over

Advocates of free speech and limited government have won an important victory. Fascist regimes and the European Union had joined hands in an effort to place the Internet under the control of the corruption-riddled United Nations. This scheme was blocked, but the scandal-plagued head of the U.N. is still agitating to get his greedy hands on the Internet. As former Delaware Governor Pete DuPont warns, this U.N.power grab may be motivated by a desire to tax Internet functions such as email.

[Excerpt from The Wall Street Journal]

Dennis Kozlowski stole $600 million from Tyco and got eight to 25 years in prison; Kofi Annan supervised more than $12 billion in international theft and will stay in his job. All of which explains why allowing the United Nations to be in charge of running the Internet is a very bad idea. ...Today no organization or government controls the Internet. ...Much of the rest of the world, gathered last week in Tunisia for the U.N.-hosted World Summit on the Information Society, wants to take over that responsibility, or as European Union spokesman Martin Selmayr put it, the U.S. must "give up their unilateral control and everything will be fine." ...Old Europe and the despotic nations want exactly that--international Internet content control. And they have convinced the EU establishment that U.N. control of the Internet would be just and appropriate. ...The good news is that last Wednesday U.N. and U.S. representatives in Tunis agreed upon, and the World Summit then adopted, a process that at least for the moment avoids U.N. control of the Internet. ...But the war against Internet freedom is far from over; Mr. Annan again demands international discussions of "Internet governance issues" and says that change has become necessary regarding Icann Internet oversight. So first the U.N. and the E.U. will seek Internet content control, and then perhaps the old U.N. idea of applying an international tax on e-mail messages. [Link to full article below:]

November 21, 2005, The Wall Street Journal, By Pete Du Pont, Cease-Fire in Tunisia: The U.N.'s war on Internet freedom isn't over.


9) Weak-kneed financial services association comments on OECD hypocrisy

The Organization for Economic Cooperation and Development is a Paris-based bureaucracy that is trying to hinder tax competition. But the OECD is having a hard time achieving its tax harmonization goals because many of its own member nations are "tax havens." reports that the Society for Trust and Estate Professionals is complaining that countries such as Austria and Luxembourg, and states such as Delaware and Wyoming, have refused to make any sort of commitment to the OECD. This means there is no "level playing field" and low-tax jurisdictions persecuted by the OECD therefore do not have to surrender their fiscal sovereignty. It does appear, though, that STEP officials "drank the kool-aid" since they are suggesting that the so-called level playing field is a good idea. This is terrible economic policy. A level playing field based on high tax rates and no privacy would cripple tax competition and lead to bigger government. No nation has the right to tax income earned outside its borders, and low-tax jurisdictions certainly have no obligation to help high-tax nations track - and tax - flight capital. High-tax nations should reduce tax rates and reform their tax systems if they want to stop the exodus of jobs and capital. Thankfully, most of the low-tax jurisdictions targeted by the OECD know that the "level playing field" issue is merely a tactic to preserve fiscal sovereignty. Too bad STEP has an appeasement mentality. If STEP officials were in charge of the negotiations, they would pre-emptively surrender faster than the French army.

[Excerpt from]

Commenting on the outcomes of the Melbourne Global Forum, Keith Johnston, Head of Policy and Communications at STEP Worldwide, said: " is worrying that a large number of the other jurisdictions that attended the Forum for the first time, such as Austria, which is a member of both the OECD and the European Union, continue to refuse to offer this endorsement. Other major finance centres, including Luxembourg and Belgium, also both OECD and EU members, refused even to attend the Forum, let alone commit to the principles of exchange and information and transparency. There has also been no attempt to bring US states, such as Delaware and Wyoming, into the process, despite these being in competition with major finance centres across the world." [Link to full article below:]

November 21, 2005,, by Amanda Banks, STEP Still Critical Of OECD Information Exchange Process


10) Dan Mitchell on a Flat Tax System in the Australian

[Excerpt from The Australian]

And US-based economist Dan Mitchell told the Sydney seminar hosted by the Centre for Independent Studies that scrapping deductions and concessions would simplify the law.

     Dr Mitchell said Canberra should follow the US administration, which is consider introducing a flat tax regime.

     US President George W. Bush commissioned tax advice with the aim of overhauling the system, potentially along flat-tax lines.

     Dr Mitchell, from the market-based Heritage Foundation, said Australia's top tax rate of 47 per cent was uncompetitive in a globalised labour market.

     "This is an international race you don't win a race by standing still and getting fat and happy," he said. "We've been pushing for the last five years -- we feel we've made a lot of progress in the US, but we still have a big leap to get to tax reform.

     "Our current system is so riddled with loopholes it's like a ball and chain around the ankles of the US economy. We're very worried about international competition, as Australia should be.

     "It's more important for Australia, because in the US we compete with high-taxing European countries, but you have to compete with Hong Kong and Singapore, where the tax rate is no higher than 18 per cent."

November 18, 2005, The Australian, by Elizabeth Colman, Australia's out of step: flat tax crusaders


Best regards,

Andrew Quinlan
Center for Freedom and Prosperity


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