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Exposing the OECD (the "World Tax", "World Government" Agenda)

(OPC Newsletter Excerpts)


Exposing the OECD

[Excerpt from OPC newsletter 2001-03-19:]

Even more so than the FATF (profiled in last week's issue of The Invisible Libertarian), the OECD is often portrayed as Arch-Villain Number One when it comes to multilateral organizations seeking to destroy financial privacy and sovereign autonomy.

The OECD (Organization for Economic Co-operation and Development) has been unrelenting in its determination to halt what it calls "harmful tax practises", which it defines as any taxation level set below that ordained by Big Brother. It would appear that "harmful" tax practises are the work of evil hands because they drain Big Brother's pocket of much needed revenue. As capital flows from jurisdictions imposing a "proper" tax level and into jurisdictions with low or no imposed taxes, grievous agony is wrought upon Big Brother's tax balance sheet. Such a travesty is of course an abomination to Life, the Universe, and Everything, at least in the eyes of tax-hungry bureaucracies.

Fortunately, a growing number of organizations and individuals have begun to realize that "harmful tax practises" are in fact a vital component of much-needed competition in the global economy. The offshore jurisdictions attacked by the OECD over the past year have now begun a serious counter-attack against their oppressor. They've been aided by the US-based Center for Freedom and Prosperity, and also by recent events in US politics which seem to indicate that the US Establishment may no longer be interested in backing the OECD's plans to shut down any and all tax havens.

It would appear that the OECD is on the defensive and is now struggling to justify its position as Big Brother's tax-attack dog before it's neutered and de-fanged on this front. However, the battle is far from over. Here's a look at the OECD and its many multilateral faces....

Introduction

The Organisation for Economic Co-operation and Development has been called a think tank, a monitoring agency, a rich man's club, an unacademic university, and even less complimentary names (particularly in OPC editorial comments). It groups together 30 member countries (which collectively produce two thirds of the globe's goods and services) for the purpose of manipulating the economy to suit the political overclass of the day. In the words of the OECD website itself, it:

"...provides governments a setting in which to discuss, develop and perfect economic and social policy. They compare experiences, seek answers to common problems and work to co-ordinate domestic and international policies that increasingly in today's globalised world must form a web of even practice across nations. Their exchanges may lead to agreements to act in a formal way - for example, by establishing legally-binding codes for free flow of capital and services, agreements to crack down on bribery or to end subsidies for shipbuilding. But more often, their discussion makes for better informed work within their own governments on the spectrum of public policy and clarifies the impact of national policies on the international community. And it offers a chance to reflect and exchange perspectives with other countries similar to their own."

Astute readers will note the absence of the phrases "free market", "laissez-faire", "capitalism", "individual choice", etc. in the above paragraph. Since when does the world require domestic and international policies which "must form a web of even practises across nations"? This is nothing more than socialism and totalitarianism, only phrased a little more politely than we would put it.

Essentially, the OECD is the Big Brother of Big Brother governments. Sovereignty is not allowed. Choice is not permitted. Everything must be decided by government policy, and all government policies must be coordinated so as to adhere to an international strait-jacket of regulatory and legislative conformity.

For Members Only, But They'll Make You "Co-operate" Anyway

What permits a government to join this "Masters of the Universe Club"? Officially, only a commitment to a market economy and a pluralistic democracy, as well as "respect for human rights". This little definition doesn't say anything about exactly how committed the nation must be to a free market (otherwise crony capitalism and market-rigging would disqualify pretty much everyone currently a member). And it doesn't say anything about how truly free the democracy must be (which would axe most of the remainder, e.g. Mexico, with its decades of one-party rule lasting until the most recent election). Lastly, we can be certain that "respect" for human rights doesn't include respect for privacy, financial confidentiality, or pretty much anything else that Big Brother has decided he doesn't like.

Despite these "minor" oversights, the core of original OECD members has expanded from Europe and North America to include Japan, Australia, New Zealand, Finland, Mexico, the Czech Republic, Hungary, Poland and Korea.

So who gets to play the game of "Let's Make A Policy!" at the OECD?

In alphabetical order (date of OECD entry in brackets), the members are:

Like any bureaucracy, the OECD never stops growing. When a candidate country expresses its desire to join the organization (and the existing members are convinced it's managed to successfully fake compliance with the requirements just like everyone else) a formal accession procedure is begun.

This procedure includes adherence to the 1960 Convention that established the OECD in the first place. Apparently, (from the website):

"...Article 1 of this Convention requires the OECD to promote policies designed to achieve the highest sustainable economic growth and employment and a rising standard of living of the population. This must be achieved while maintaining financial stability inside the OECD area as well as on a world scale. The same article also requires that Member countries contribute to the expansion of world trade on a multilateral and non-discriminatory basis. Under the terms of Article 2 of the Convention, OECD countries undertake to ensure economic growth and external and internal stability, to reduce obstacles to trade in goods and services, to liberalise movements of capital, and to contribute to the economic development of all the world's countries. Members undertake to keep each other informed and to provide the Organisation with the information necessary for the accomplishment of its tasks, and to consult together, carry out studies and co-operate closely."

Examining this paragraph demonstrates that only OECD itself gets to decide exactly which criteria promote the highest sustainable economic growth while maintaining financial stability, not to mention the rest of the bureaucratic twaddle they foist upon the world in this so-called "Convention".

We would venture to suggest that abolishing fiat currency and income taxation while strictly limiting the powers of central government's legislative and regulatory powers would be the most potent forces in existence for achieving the OECD's stated economic and financial goals. But of course, such free enterprise, capitalistic, and individual-centric policies simply aren't worthy of consideration. The OECD is only interested in ideas that keep its sponsoring governments and itself flush with cash and power.

Another vital point from the quoted paragraph is that the OECD feels obligated to impose its ideas even upon non-member countries. So even if you're not already corrupt enough and Big Brother-like to actually qualify for a formal membership, you're still expected to go along with the plan anyhow. Apparently this is supposed to be beneficial to the citizens of non-member countries, although it's not made clear exactly how this is to happen.

Here A Committee, There A Committee....

True to bureaucratic tradition, the OECD member countries meet and exchange information in committees. This ensures maximum expenditure and minimum result and gives members an excuse to send representatives from national administrations and also to establish permanent OECD delegations. What better place to send loyal servants of Big Brother than a cushy, plush appointment not subject to public scrutiny or oversight?

All of this mess takes place in Paris with the Secretariat of the OECD itself, and all is governed an overriding committee called the Council. The Council is composed of one representative for each member country (as well as a representative of the European Commission), and meets regularly at the level of Ambassadors to give general guidance to the OECD and its work. Additionally (just in case the special ambassadors aren't capable of getting anything done), the Council meets at ministerial level once a year, "when foreign, finance and other ministers from member countries raise - and give public prominence to - important issues and set priorities for OECD work over the coming year."

This OECD work is delegated to (surprise, surprise!) specialised committees which meet "to advance ideas and review progress in more tightly defined areas of policy - such as trade, public management, development assistance or financial markets," according to the OECD website. Note that results, accountability, and efficiency aren't part of the OECD Special Committee lexicon.

That's hardly surprising when we see that there are about 200 committees, working groups and expert groups all busily producing reports on the nothing they are doing, and - horrors! - they're regularly interrupted from this important task by more than 40,000 senior national administration officials who annually come to visit and share knowledge and "review progress."

Here's a sampling of the diverse and critical areas requiring constant oversight and monitoring by the OECD, lest the world fall into a shameful Dark Age of de-regulated and un-legislated ill repute:

What's a poor bureaucrat to do when confronted with these masses of people and policies and committees and senior officials?

Well, presumably, he'll call upon the approximately 1,850 staff of the OECD Secretariat in Paris, who work directly or indirectly to support the activities of committees. And if he needs some "facts" to back up the tremendously important policy or idea he's "advancing" or "reviewing", there's also some 700 economists, scientists, lawyers, and other professional staff to provide research and analysis.

It's a good thing that the OECD has a senior official to manage all of this. The OECD Secretariat is directed by a Secretary-General (Donald J. Johnston, Canadian career lawyer and politician). The Secretary-General also gallantly shoulders the onerous double burden of chairing the Council as well, providing (at least in theory) a crucial link between national delegations and the OECD Secretariat itself. And presumably he and everyone else speaks both English and French, the two official OECD languages.

Mr. Johnston is in turn assisted by four deputy Secretaries-General:

There's presently no word on how many Assistant Deputy Under-Sub-Secretaries each deputy Secretary-General needs for assistance, in turn, but we can be sure there are plenty of political flunkies prepared to bravely shuffle endless stacks of policy paper in service to the New World Order.

The OECD At Work

In case any readers are still confused (or skeptical) about the vital importance of the OECD's work, here's a simple explanation of the work of the OECD Secretariat. It:

"...parallels the work of committees, with each directorate servicing one or more committees, as well as committees' working parties and sub groups. But increasingly, OECD work is cutting across sector lines and in cross-disciplinary or horizontal studies. The OECD International Futures Programme, for example, which aims at identifying emerging policy issues at early stages, is thoroughly multidisciplinary. Work on employment and unemployment has brought together macroeconomic specialists, experts on tax and enterprises, on technology as well as labour market and social policy analysts. Environment and economic analysis can no longer be examined in isolation. Trade and investment are inextricably linked. Biotechnology concerns policy for agriculture, industry, science, environment and development. Gauging the effects of globalisation will draw in virtually every field of policy analysis."

Where would we be without an Organization specializing in "identifying emerging policy issues at early stages"? Clearly, right back in the Stone Ages with those Pre-Government Policy savages.

And "gauging the effects of globalisation" to "draw in virtually every field of policy analysis" guarantees that those hard-working bureaucrats will never be out of a job. After all, it's government's sacred mantra that more bureaucrats leads to more policies, which leads to more analysis, which requires more bureaucrats, which.... well, you get the picture.

By the way, you've undoubtedly foreseen that identifying, advancing, and reviewing all those important government policies requires lots of money. The more the better, of course. Therefore no one gets off lightly, and the annual contribution of each member country is calculated according to the weight of its economy. The United States is the biggest contributor, followed by Japan. At the present time the annual budget is around US$200 million, which amounts to around US$1 million per committee, or (figuratively speaking) probably a dollar per page of useless report, study, or review material.

And what topics do we get for our hard-earned tax dollars? Economics, Statistics, Environment, Development, Public Management, Trade Enterprises, Financial and Fiscal Matters, Science, Technology, Industry, Social Policy, Agriculture, Regions, Cities and the Countryside, Energy are a start.

But wait, there's "priority" OECD Activities requiring important reviewing as well! Aging Populations, Fighting Bribery and Corruption, Corporate Governance, Education and Training, Electronic Commerce, Jobs, Macroeconomic Policies, Regulatory Reform, Sustainable Development, Taxation, and Trade....

Just in case that doesn't cover anything that a Big Brother government might conceivably want to regulate, control, restrict, oppress, or otherwise manipulate, the OECD is always ready to add more topics to the list.

Sadly, the OECD neglects to notice that most of these "problems" requiring OECD oversight are government-inspired in the first place. Trade, for example, has no need of regulation whatsoever in a free market, save for the application of criminal law in instances of fraud. But that would be too simple, wouldn't it?

Which Came First: The Bureaucrat or the Bureaucracy?

The OECD has always been about government oversight; the difference between now and then is that the OECD forerunner actually performed a constructive, beneficial function. The organization's predecessor was the Organisation for European Economic Co-operation (OEEC), which administered American and Canadian aid (under the guise of the Marshall Plan) to reconstruct Europe after World War II. That useful phase lasted 16 years, because since 1961, when the OECD took over from the OEEC, it's been nothing more than an excuse for the policy-review drivel we've criticized so heavily already.

No bureaucracy likes to solve a problem, because it would negate the need for that bureaucracy. When the OEEC should quite rightfully have been laid to rest (having achieved the result it was designed to oversee) it was instead transmogrified into an entity that will never die. At least, it won't be dying anytime soon without a wooden stake of common sense and accountability driven through its bureaucratic heart.

In fact, matters are moving in just the opposite direction. The OECD itself is proud to proclaim that after more than thirty years, the organization:

"...is moving beyond a focus on its own countries and is setting its analytical sights on those countries - today nearly the whole world - that embrace the market economy. The Organisation is, for example, putting the benefit of its accumulated experience to the service of emerging market economies, particularly in the countries that are making their transition from centrally-planned to capitalist systems. And it is engaging in increasingly detailed policy dialogue with dynamic economies in Asia and Latin America.

But its scope is changing in other ways too. The matrix is moving from consideration of each policy area within each member country to analysis of how various policy areas interact with each other, across countries and even beyond the OECD area. How social policy affects the way economies operate, for example. Or how globalisation will change the world's economies by opening new perspectives for growth, or perhaps trigger resistance manifested in protectionism.

As it opens to many new contacts around the world, the OECD will broaden its scope, looking ahead to a post-industrial age in which it aims to tightly weave OECD economies into a yet more prosperous and increasingly knowledge-based world economy."

So there we have it. Big Brother officially awoke after 1991 and began the Socialist globalization drive with a vengeance. So it comes as no small surprise that many of the most Big Brother-like government policies have spread their cancerous growths throughout the world's most prosperous countries since that time.

Is it any coincidence that Communism was officially discredited around that time with the collapse of the Soviet Union? Once the obvious Red "threat" was banished from the public's mind, stealth Communism accelerated to new levels of dominance. Freedom is being slowly eaten alive by a virus from within, whereas in earlier years the apparent danger lurked "over there" across foreign oceans and international borders.

The OECD and the Public

Big Brother needs to appear friendly to the public, of course, lest he be mistaken for the great Red Menace and taken for an enemy.

So while the OECD devotes much of its energy to building contacts between governments, the member countries have recently placed a higher level of priority on communicating with the public. How is this done?

No mention is ever made of giving the public any direct access to the OECD PR efforts. Only journalists and other approved representatives are allowed to make contact.

And as far as actual visits to the organization are concerned, you're out of luck unless you're a business leader, trade union rep, parliamentarian, academic, journalist, university student or other such individual who's part of a group of at least 10 people.

"A typical visit lasts about two hours and is conducted in one of the two official languages of the OECD, French or English. It begins with a short film about the OECD. Then, one or several members of the Secretariat brief the visitors on the particular topics of interest to them. A member of the relevant Delegation to the OECD may also be involved in the visit. Participants receive a folder containing booklets and other relevant background information on the OECD.

Every visit is unique and is organised to suit the needs and interests of the particular group. The Visits Section tries to provide the most appropriate speakers, drawn from the many facets of OECD work -- economics, education, science, environment, public management, employment, technology, to mention only a few.

Student groups are accepted only from upper university levels, and students must have a good knowledge of one of the OECD areas of activity."

So unless you're a member of these elite and select groups (and therefore thoroughly indoctrinated in Big Brother principles in the first place), you're simply not invited. Funny thing is, we never got a chance to "invite" [refuse] the OECD and its ideas on world government into our lives in the first place.

We need far more resistance to their ideas on "harmful tax practises" and other bureaucratic nonsense. It will take a long time to cut these policy-review puppeteers down to size, but fortunately the process has already begun with the resistance movement led by the offshore tax havens.

The anti-sovereignty movement will accelerate as citizens from other countries feel the unwelcome bite of Big Brother's ideas and realize that Big Government is Bad Government.

To check out the OECD's website: http://www.oecd.org



[Excerpt from OPC newsletter 2001-03-19:]

From: http://www.tax-news.com/asp/story/story.asp?storyname=2652

Three More US Congressional Voices Raised Against The OECD

News has emerged that three further high-profile Congressmen have added their weight to the battle on the side of those opposed to the new fiscal colonialism.

First is Senator Jesse Helms who wrote:

"... the OECD has been pursuing a project to fight allegedly "harmful tax competition." This project produced, for example, the perverse January 26, 2000, report "Toward World Tax Cooperation," strongly critical of so-called "tax havens."

But, I find troubling that the OECD threatens many low-tax countries simply because they are luring investment away from high-tax nations. I believe this to be economically unwise and morally questionable. ...

If high-tax countries are worried that they are losing their tax base, the proper response is their lowering their tax burdens rather than trying to force low-tax nations to raise tax rates or to serve as vassal tax collectors.

Most importantly, lower tax rates and pro-growth tax reforms are key determinants of a developing economy's performance. A [lower] tax burden obviously rewards entrepreneurial initiative and attracts investment, leading to rising income levels and broadly-shared prosperity.

Such economic policies lead to growth in developing nations (and they can become less reliant on foreign aid)."

Then comes Senator Judd Gregg who wrote:

"I am writing to express my concern about the Organization for Economic Cooperation and Development's (OECD) so-called "harmful tax competition" initiative. ... The OECD's assault against low-tax countries would force them to change their tax systems or face financial protectionism from the OECD countries. ...

To threaten sovereign nations with financial protectionism simply because they have tax laws that make them attractive to the world's investors is both economically misguided and morally bankrupt. Indeed, we should be encouraging more nations to adopt market-oriented policies as a development strategy.

... the OECD initiative seeks to promote worldwide tax regimes, an approach that has adverse implications for competition, privacy, and sovereignty."

Finally, Congressman Thomas Reynolds added his name to the roster of powerful Congress leaders to attack the OECD:

"As we know from our own history, tax competition, lower tax rates and a pro-growth tax code are key determinants of an economy's performance. A [lower] tax burden rewards entrepreneurial initiative and attracts investment. This, of course, leads to rising income levels and broadly shared prosperity.

Unfortunately, the Organization for Economic Cooperation and Development (OECD) is threatening this successful formula. Two years ago the OECD launched a project to stop so-called "harmful tax competition". ...

In fact, tax competition is a positive force in the global economy. It pressures lawmakers to reduce tax rates and make long-overdue budgetary reforms. But this issue involves much more than fiscal policy. It has important implications for individual freedom and national sovereignty.

America should not take part in any multi-lateral effort that seeks to penalize nations with low tax burdens. We also should be careful about supporting an endeavor that could be used against us in the future. As you know, the United States is a "tax haven" compared to many other nations. This low-tax status has allowed us to attract trillions of dollars of wealth to our economy, all of which has boosted job creation and economic performance. I am concerned that some of our high-tax competitors eventually would use the OECD's attack on low-tax nations as a precedent to pressure us to eliminate our favorable tax and privacy laws."



[Excerpt from OPC newsletter 2001-04-23:]

Comment below on article published here: http://www.tax-news.com/asp/story/story.asp?storyname=3080

"OECD Member States Tighten Up Their CFC Rules

It is already a long time since companies in high-tax areas of the world worked out that by having subsidiaries in lower-tax areas which retained their earnings rather than remitting them to the holding company, they could defer or even perhaps avoid taxation altogether on the profits concerned.

It's only a slightly shorter time since the relevant tax authorities responded either by creating 'controlled foreign corporation' rules which imposed taxation on the unremitted profits or adopted generalised 'anti-avoidance' laws which had the same effect.

Originally, such rules or laws usually followed a majority test to determine control, but have increasingly moved to lower barriers as taxpayers started to divide ownership. ...

The OECD has encouraged its member countries to adopt CFC rules if they don't already do so - Italy is one recent new recruit to the CFC club - and a number of other countries have strengthened or adapted their CFC rules in recent months. ..."

COMMENT: This is the wave of the future if the OECD and its anti-"harmful tax practises" aren't stopped. There will be no tax competition left anywhere if these bureaucrats are allowed to trample all over an individual's right to minimize his or own personal taxes.

Government bureaucrats fail to realize (or simply don't care) that people would not be "evading" taxes if they thought the system was fair. People who "cheat" on taxes and who are otherwise law-abiding are expressing an obvious opinion on the perceived unfairness of "tax law".

Another target in any freedom-loving lobbying organization's gunsights should be the notion that Big Brother has a right to know everything that individuals are doing with their own money. Since taxation is such a big problem, why not reduce the tax burden to the point where people no longer feel that there's any benefit to be gained by avoiding or evading taxes?



[Excerpt from OPC newsletter 2001-09-17:]

Comment below on article published here: http://www.tax-news.com/asp/story/story.asp?storyname=5316

Will Technology Help Or Hinder The Tax Collectors?

The Internet is already a graveyard of the economic hopes of what we might call the silicon generation. Their hubris was unparalleled, and the resulting nemesis is still working itself out. Never mind; the internet (time it lost that precocious capital letter) will in its own good time become the warp and weft of business. The fun is over - now it will all happen in the most sensible, serious way, so as not to tempt another bout of retribution from the Gods.

The internet, though, is becoming the scene for a much more important battle, that over globalisation. It's a word that has already accreted so many meanings that it has ceased to mean anything useful - but the issues in whose cause it is invoked are vital, even apocalyptic.

At first, as the internet emerged from its ivory tower, fanciful libertarians saw in it an anarchic crowbar to force open the secretiveness of governments. All citizens would be empowered by the knowledge they could freely obtain from the internet, and never again would government be able to oppress them with senseless economic or cultural rules and imperatives. Liberal economists saw that the freedom the internet provides for people to make economic bargains outside the trammels of existing systems would disempower governments, and the market would triumph in a seamless, (here we go!) globalised forum.

Government may be slow on the uptake, but it is sure, and once it had noticed that the internet could undermine its powers, it began to fight back. At first government, not having 'got it' in Andy Grove's immortal phrase, supposed that it could stop the internet, King Canute-like, just by denying it; but not for long. Government has now begun to realise that, far from being a threat, the internet can be used to increase its own power while at the same time limiting the privacy (= freedom) of citizens.

The anti-globalisers see the growth of international business as a threat to their cultural identity; what they perhaps don't see so clearly is that the use of globalised public institutions to contain corporate greed amounts to the creation of a Trojan Horse which will deliver us into the hands of a globalised government.

Starting from the present reality of globalisation, Daniel Mitchell, McKenna Senior Fellow at the Washington-based Heritage Foundation, has written a thoughtful paper in which he tracks the possibility that the internet will be subverted into an instrument for the aggrandisement of government and the curtailment of individual freedom.

Globalization is bad news for the world's over-taxed welfare states, particularly those in Europe. Thanks to the increased mobility of capital, individuals can more easily shift their economic activity to low-tax jurisdictions. Such tax competition liberalizes the world economy by putting downward pressure on taxes and government spending.

Not surprisingly, politicians from high-tax governments resent this constraint. Using international bureaucracies like the Organization for Economic Cooperation and Development (OECD), the European Union (EU), and the United Nations as front groups, these lawmakers are pushing to "harmonize" taxes across countries. Their argument is simple: It is unfair when nations with low taxes lure savings, investment, and entrepreneurial talent away from nations with high taxes.

As might be expected, the European experience demonstrates that harmonization always means that taxes go up, not down. The direct form of tax harmonization - a requirement that all countries have similar tax rates - is not politically feasible outside of Europe. So high-tax nations are pursuing an indirect form of harmonization known as "information exchange." Under this policy, governments agree to collect detailed financial information about taxpayers from other nations - including investors and entrepreneurs - and then swap that data with tax collectors from other countries.

Information exchange allows a high-tax nation like France to subject income earned by its citizens in other countries to French tax rates. Then French taxpayers are, for all intents and purposes, held hostage by this system of "worldwide" taxation. No matter where they move their money, they are unable to benefit from lower taxes. But good news for French politicians is not good news for the world economy, and higher taxes are just the tip of the iceberg.

But this is not just a fiscal policy issue. The multilateral assaults on tax competition also represent bad policy across a variety of fronts. Indeed, Europe's tax harmonization agenda is a threat to technological development, especially in the financial services sector.

The tax harmonization agenda has adverse tech implications. The willingness of consumers to adopt new technologies and to expand their use of existing technologies could be undermined if they feel government is monitoring their private financial transactions. Another problem is that governments may stifle new technologies because they are not able to monitor private financial transactions. Here is what international bureaucracies have in mind:

  1. The OECD is worried that "smart cards" and other forms of digital cash will make it difficult to track financial flows.
  2. The Financial Action Task Force (FATF), an arm of the OECD, is concerned that the Internet makes it possible for people to do business in other nations without the knowledge of government.
  3. The OECD and the EU both are seeking to create monitoring systems for e-commerce so consumers no longer have the freedom to shop where taxes are lower.
  4. The United Nations blames financial deregulation for creating too many new products and services because it is now more difficult for governments to track money.
  5. An OECD official has stated that online banking is a dangerous problem.
  6. Those who fear transactions taking place without government supervision also have targeted the cyber-payments system. The OECD even has suggested limiting the range of online services or the amount of transactions.
  7. The UN has criticized stock exchanges and other financial institutions that allow anonymous trading.
  8. The FATF actually has suggested that it may be desirable to place restrictions on international ATM withdrawals.

The good news is that this tax collectors' wish list has not been put into action. The bad news is that information exchange - if implemented - will be the proverbial camel's-nose-under-the-tent. Once that occurs, there is no principled argument to prevent the government from co-opting new technologies and interfering with the development of more efficient financial markets.

Then there's the non-tech consequences of information exchange:

Simply stated, "tax harmonization" is a threat to America's national interests. As the world's largest tax haven, America should defend tax competition. Unfortunately, the Bush Administration has sent mixed signals. The Treasury Secretary clearly has stated his opposition to explicit tax harmonization, yet he also testified in July that he would seek to negotiate information-exchange treaties with targeted low-tax countries.

The United States is the biggest beneficiary of global tax competition and any effort to undermine this process - even if America is not the immediate target - will hamper our long-term competitiveness. Compared to other OECD member countries, we are a low-tax nation. Our marginal tax rates are moderate and the aggregate burden of taxation in America - about 30 percent of GDP - is significantly lower than it is in Europe. Indeed, compared to nations like France, where taxes consume about half the economy's output, we are a tax Mecca. Perhaps more important, the U.S. has very attractive tax and privacy laws for nonresident foreign investors. For them, America is the Cayman Islands.

If countries accept the concept that governments should know everyone's private financial affairs, then any technology that allows individuals to do business in a confidential fashion will be seen as obstacles to what House Majority Leader Dick Armey has referred to as, "a global network of tax police."

Daniel J. Mitchell is the McKenna senior fellow in political economy at The Heritage Foundation, a Washington-based public policy research institute.

COMMENT: There is much to be worried about in the world besides the immediate threat of international terrorism. Financial terrorism by government bureaucrats is quite possibly a worse (if less apparent) threat to civil liberties and the moral right to freedom and happiness enjoyed by individuals.

The more surveillance power government bureaucrats have over your money, the more government bureaucrats will benefit at your expense. What's good for political parasites is most definitely not good for individuals.


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