The Coalition for Tax Competition
Working through the Organisation for Economic Co-operationand Development (OECD), high-tax nations are seeking to dictatetax policy around the world in order to shield themselves fromcompetition. To protect the world economy from this threat, THECOALITION FOR TAX COMPETITION has been formed. The only organizationof its kind, the Coalition will defend tax competition, financialprivacy, and fiscal sovereignty. The Coalition is a project ofThe Center for Freedom and Prosperity, an independent, nonprofitlobbying organization that was created to promote and preserveeconomic liberty in a global economy. The Coalition also willwork closely with THE FREEDOM AND PROSPERITY FOUNDATION. The Foundationis an independent, nonprofit, tax-deductible educational organizationcreated to promote economic prosperity by advocating competitivemarkets and limited government.
Coalition Lobbying
THE CENTER FOR FREEDOM AND PROSPERITY will explain to lawmakerswhy competitive international markets are desirable and why thecampaign to undermine tax competition is so misguided. More specifically,the Center will urge government officials to reject efforts tocreate international tax cartels. The Center will press policymakers to oppose the assault on financial privacy. And the Centerwill lobby politicians to preserve fiscal sovereignty.
Coalition Research
THE CENTER FOR FREEDOM AND PROSPERITY FOUNDATION will produceresearch on the subject of tax competition, financial privacy,and fiscal sovereignty. The articles and papers published by theFoundation will explain, in easily understandable terms, why taxcompetition is needed and why the international effort to replacemarket forces with political controls would have very adverseresults.
What is tax competition and why is it needed in a globaleconomy?
Because it is increasingly possible for people to shift theireconomic activity across national borders, governments face pressureto reduce tax rates in order to keep investment and entrepreneurialtalent from moving to lower-tax environments. This is what isknown as tax competition and it is an important check on excessivegovernment power and control, both domestically and internationally.
High-tax nations, not surprisingly, want to stop tax competition.This explains why politicians from high-tax nations are usingthe Organization for Economic Co-operation and Development (OECD)in an effort to protect themselves from competition. At theirbehest, the OECD has launched a campaign to shut down small low-taxregimes (the so-called tax havens). These small nations and territoriesare being threatened with sweeping financial protectionism unlessthey redesign their tax and privacy laws to make it easier forEurope's welfare states to collect more tax revenue.
The assault against so-called tax havens is just the beginning.If the OECD had applied its criteria fairly, many larger regimes- including the United States, Switzerland, Hong Kong, Luxembourg,Ireland, Singapore and the United Kingdom - would have been classifiedas "tax havens." Almost certainly, the politicians andbureaucrats will begin to target these jurisdictions if theirefforts to bully the so-called tax havens succeed.
The OECD plan is wrong, and THE COALITION FOR TAX COMPETITIONwill fill a critical niche in the battle to thwart this ill-advisedeffort. Competition, privacy, and sovereignty are inherent featuresof a free society. As such, tax competition between countriesshould be celebrated, not persecuted. As a Heritage Foundationpaper on the issue states, tax competition "forces politiciansto be more responsible, pushing tax rates down and allowing peopleto enjoy more of the money they earn."
Frequently asked questions
Q: Are there good examples of tax competition?
A: When President Ronald Reagan dramatically reduced incometax rates in the 1980s, almost every other industrialized nationin the world was forced to follow his example. In most cases,this was not because politicians suddenly wanted to increase economicfreedom. Instead, they felt compelled to make these changes tominimize the amount of investment and entrepreneurial talent thatwas flowing to the United States.
Q: What is the best way to reduce tax evasion?
A: Proponents of the OECD effort claim that the assault againsttax competition is the only way to stop people from illegallyevading taxes. This is not true. Economic research demonstratesthat low tax rates and withholding (taxing income at the source)are the keys to compliance. This approach is far more consistentwith a free society.
Q: Can the OECD be stopped?
A: Fortunately, the OECD has no power to impose its will. Itcannot dictate tax policy in any nation - even countries thatbelong to the organization. Nor can the OECD implement financialprotectionism (the "stick" which with the so-calledtax havens are being threatened). The OECD can ask its membernations to impose financial protectionism, but this is why theOECD's proposal can be defeated. As long as the United Statesdoes not participate, the entire effort will collapse. And sincelegislators sympathetic to free markets and low taxes controlthe US House and the US Senate, an effective lobbying and educationcampaign can ensure victory.
Q: What about money laundering?
A: Lawmakers from around the world should cooperate in thecampaign against crime, but politicians should not be allowedto use this effort as a ruse to destroy financial privacy andundermine civil liberties in a search for more tax revenue.
Who we are:
THE CENTER FOR FREEDOM AND PROSPERITY and THE FREEDOM AND PROSPERITYFOUNDATION were founded by three people who believe in free marketsand limited government. The organizers of the Center and the Foundationare:
Daniel J. Mitchell, Ph.D.
Dan Mitchell is the Chairman of the Board of THE CENTER FORFREEDOM AND PROSPERITY. As the McKenna Senior Fellow in PoliticalEconomy at the Heritage Foundation, Dan is the nation's leadingexpert on tax competition. Dan will be primary author of publicationsfor the Foundation.
Andrew F. Quinlan
Andrew Quinlan is the President of THE CENTER FOR FREEDOM ANDPROSPERITY and the Trustee for THE FREEDOM AND PROSPERITY FOUNDATION.A former senior staff member of the Congress' Joint Economic Committee.Andrew will be responsible for running the day-to-day operationsof the organization.
Veronique de Rugy, PhD.
Veronique de Rugy is a post-doctoral research fellow at GeorgeMason University. A French citizen, Veronique was in charge ofacademic programs for the European Institute for Humane Studies.Veronique will be directing outreach to the academic and overseascommunities.
For more information, please contact:Andrew F. Quinlan, President6023 Shaffer Drive, Alexandria, VA 22310Phone: 202-285-0244Fax: 603-971-9137Email: info@freedomandprosperity.orgwww.freedomprosperity.org