New Study Documents OECD’s Transformation Into International Tax Cartel

Center for Freedom and Prosperity

For Immediate Release
Wednesday, November 2, 2011
202-285-0244

www.freedomandprosperity.org

New Study Documents OECD’s Transformation
Into International Tax Cartel

(Washington, D.C., Wednesday, November 2, 2011)Cartelizing Taxes: Understanding the OECD’s Campaign Against ‘Harmful Tax Competition’,” documents the transformation of the Organization for Economic Cooperation and Development (OECD) from its “initial focus on finding solutions to problems that impeded international economic activity” into an organization chiefly concerned with enabling a few high-tax countries to collect revenues at the expense of other, lower tax, countries. This newly released and intriguing paper is authored by Dr. Andrew P. Morriss of the University of Alabama, and Lotta Moberg, of George Mason University.

The paper can be downloaded for free at:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1950627

The paper provides a thorough history of the OECD and how an organization originally focused on promoting economic development was transformed into a tool of pro-tax bureaucrats and politicians looking to pursue an anti-tax competition agenda. According to the paper, “In both Europe and the United States, liberalization of finance had exposed governments to competition that they did not like from offshore jurisdictions and from each other. …As both European governments and the United States were committed to further financial liberalization internationally, both were beginning to search for ways to insulate themselves from this competition.”

Particularly noteworthy is the role of the OECD’s 1998 report on “Harmful Tax Competition.” Morriss and Moberg note that, “While tax avoidance and evasion has been a part of the OECD work on taxation for decades, the 1998 report marked a distinct shift away from the past practice of articulating problems and recommending general solutions to pursuing a coordinated and active effort to counteract tax avoidance and evasion, to reduce financial privacy, and to influence states to end ‘unfair’ tax competition.” This is a striking change from the organization’s previous efforts at solving double taxation problems in order to promote international commerce.

After surveying the evolution of a protectionist agenda within the OECD, Morriss and Moberg conclude with an ominous warning that, “There is … little to suggest that there will not be more efforts to harmonize previously national policies on a global scale, through recommendations, blacklists and sanctions.”

Andrew Quinlan, President of the Center for Freedom & Prosperity, commented, “We have been sounding the alarm for years on the fact that the OECD’s agenda has been effectively hijacked by high-tax nations and their tax loving bureaucrats.” He added, “With this paper, we hope to finally convince enough lawmakers that it’s time to put an end to their US taxpayer subsidy.”

Cato Institute Senior Fellow Dan Mitchell observed, “The authors have done a great job recounting the history of the OECD’s anti-tax competition campaign, and successfully demonstrated how the organization has grown increasingly at odds with ideals such as free markets and limited government.”

Grover Norquist, President of Americans for Tax Reform, said, “The OECD is an elite club of high-tax nations protecting the interests of government in the developed nations. Their principal task is to pull the ladder up over the wall to prevent low-tax, developing nations from joining their club.”

The Center for Freedom & Prosperity has frequently sounded the alarm on such OECD efforts, and has once again recently called upon lawmakers to end US subsidies to the Paris-based bureaucracy. A letter released in October by the Coalition for Tax Competition, a group coordinated by CF&P, cited the $100 million annual taxpayer subsidy to the OECD as “the height of folly.”

For additional information:
Andrew Quinlan can be reached at 202-285-0244, andy@freedomandprosperity.org
Dan Mitchell can be reached at 202-218-4615, dmitchell@cato.org

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