Opponents of tax competition have long argued that the need to combat tax evasion justified aggressive and counter-productive policies designed to eviscerate tax competition, financial privacy, and fiscal sovereignty.
The proposed IRS non-resident alien interest deposit reporting requirement received an unfriendly reception at an October 27 hearing held by a subcommittee of the House Financial Services Committee. We were on hand to represent CF&P, and noted that the hearing was both a testament to our success in disseminating the many arguments against the proposed regulation, as well as affirmation of the need to continue fighting vigorously against the IRS proposal.
Last week’s Organization for Economic Cooperation and Development (OECD) Global Tax Forum featured an unusual beginning as a looming hurricane in the Pacific forced the event from Cabo to Mexico City. This created special challenges for the Center for Freedom and Prosperity delegation since the government did not put jets at our disposal for the last-minute trip, as they did for official delegates. But we persevered and made our way to the Mexican capital.
The past several months have witnessed an unfortunate setback in the fight for good tax policy. Bolstered by a shift in the U.S. position from benign neglect to active support, anti-tax competition ideologues have won a somewhat significant victory. Low-tax jurisdictions, faced with direct and indirect threats of sanctions from powerful nations, have been forced to weaken their human-rights policies by agreeing that privacy laws no longer protect foreign investors. Indeed, jurisdictions are being coerced to sign agreements to provide confidential data upon request to at least 12 of their high-tax brethren.
Low-tax jurisdictions are being attacked by several committees in the U.S. Congress. These so-called havens are being assaulted by international bureaucracies such as the Organization for Economic Cooperation and Development (OECD) and European Commission (EC). And they are being turned into scapegoats by the politicians meeting this week for the G-20 Summit. These events do not bode well for supporters of tax competition, fiscal sovereignty, and financial privacy.