» Coalition for Tax Competition » Center for Freedom and Prosperity

In today’s global economy, governments face pressure to reduce tax rates in order to keep investment and entrepreneurial talent from moving to lower-tax environments. This is what is known as tax competition and it is an important check on excessive government power and control, both domestically and internationally.

High-tax nations, not surprisingly, want to stop tax competition. Working through the Organization for Economic Co-operation and Development (OECD), these countries are seeking to dictate tax policy around the world in order to protect themselves from competition. At their behest, the OECD has launched a campaign to shut down small low-tax regimes (the so-called tax havens), and also is trying to dictate tax policy in larger nations, including the United States, by identifying supposedly “unfair” tax policies that attract investment from overseas.

The OECD plan is wrong. Tax competition between countries should be celebrated, not persecuted. As a Heritage Foundation paper on the issue states, tax competition “forces politicians to be more responsible, pushing tax rates down and allowing people to enjoy more of the money they earn. Tax competition is a particularly good thing for the United States, drawing savings, investment, and skilled labor into the economy.”

The OECD’s campaign against tax competition is ill-advised for a number of reasons. For instance, it is:

An Attack on Taxpayers. The OECD is trying to create a cartel of high-tax nations. This arrangement – sort of an OPEC for politicians – would mean higher taxes and undermine any hope for meaningful tax reform.
An Attack on Free Trade and Global Commerce. The OECD urges member nations to penalize low-tax regimes with severe and discriminatory financial protectionism. In effect, the OECD wants to impose a financial blockade against targeted nations.
An Attack on Sovereignty. The OECD not only is trying to bully “tax havens” into raising their tax rates and eliminating financial privacy, but also asserts the right to interfere with American tax laws. Sovereign nations should be able to determine their own tax policies.
An Attack on Privacy. An implicit feature of the OECD campaign is that governments should be allowed to tax income and activities that take place outside their borders. This means that privacy will be sacrificed to make life easier for tax collectors. Moreover, governments want to force financial service companies and professional service providers to spy on their customers to help track down additional tax revenue.

Organizations affiliated with Coalition for Tax Competition


American Enterprise Institute		The Heritage Foundation
American Legislative Exchange Council		Independent Women’s Forum
Americans for Tax Reform		Institute for Policy Innovation
American Shareholders Association		IRET
Association of Concerned Taxpayers		National Center for Policy Analysis
Capital Research Center		National Retail Sales Tax Alliance, Inc
Cato Institute		National Small Business United
CF&P Foundation		National Tax Limitation Committee
Citizens for a Sound Economy		National Taxpayers Union
The Club for Growth		The Performance Institute
Coalition for Tax Competition		The Potomac Foundation
Coalitions for America		Privacilla.org
Competitive Enterprise Institute		Public Interest Institute
Council for Citizens Against Gov’t Waste		60 Plus Association
Discovery Institute		Small Business & Entrepreneurship Council
Empower America		Southeastern Legal Foundation, Inc.
Free Congress Foundation		The Sovereign Society
Freedom Alliance		United Seniors Association
Frontiers of Freedom Institute		U.S. Chamber of Commerce