This article originally appeared on The Hill on June 21, 2016.
The Washington Post recently featured a 4,000-word write-up of the Center for Freedom and Prosperity (CF&P), a think-tank that I co-founded in 2000 and have since served as President. The report provided no evidence of wrongdoing, but rather implied – including through an outrageous quote from a former Senator – that our activities are un-American. The paper denied our request to host a response, in all likelihood because I absolutely refuse to apologize for our work as a rare voice for taxpayers against unelected international organizations seeking to dictate tax law throughout the globe.
CF&P’s primary mission is and always has been the promotion of tax competition. When governments are forced to compete for citizens and investment, they produce better tax laws, regulate more efficiently, and spend more responsibly.
Within the United States we embrace tax competition as a check on excessive government. When politicians in one state impose onerous tax burdens in lieu of sound budget policy, politicians in other states see an opportunity to grow by providing a better fiscal climate. Businesses and individuals are fleeing California, as an example, for states like Nevada or Texas where the absence of state income taxes has produced a friendlier environment.
This system can only work, however, when states set policy independent of each other.
The same is true internationally, which is why the work of the Organization for Economic Cooperation and Development (OECD) is so alarming. It’s 1998 report on “Harmful Tax Competition” paid lip service to combating tax evasion, and also blurred the lines between legal avoidance and illegal evasion, while barely hiding the organization’s true aim to deny nations tax-writing independence. Having a low tax rate was, in the eyes of international bureaucrats with tax-free salaries, enough to label a jurisdiction as “harmful.”
Sadly, many politicians and bureaucrats see any victory for taxpayers as a loss for themselves. Through the OECD, they have acted upon that belief by attempting to browbeat low-tax jurisdictions into submission in hopes that they will adopt destructive tax policies like extraterritorial taxation and double taxation of savings and investment. Their new Base Erosion and Profit Shifting initiative extends that effort to business taxes as well.
Eliciting anger from government officials for speaking in opposition to these efforts is not unusual, but former Sen. Carl Levin’s accusation that our work amounts to “trading with the enemy” represents a despicable new low. If anything is incompatible with American values, it is the presumption of politicians and bureaucrats that the fruit of one’s labor belongs first and foremost to government, from whom you should be thankful for the pittances you are allowed to keep.
The former senator also doesn’t have his facts straight. His claim that we “help to starve (the U.S. government) of resources” doesn’t pass the laugh test. Federal tax receipts have climbed from $2 trillion to $3.2 trillion just since CF&P was founded in 2000.
He has further never liked our insistence that privacy rights don’t end where government tax collection begins. The implication that our work in defense of taxpayer privacy rights is a defense of tax cheats holds no more merit than the idea that objections to mass surveillance are tantamount to a defense of terrorism.
The United States, through its Foreign Account Tax Compliance Act (FATCA), has adopted the view that simply investing overseas, or being among the millions of American ex-pats who simply wish to bank where they also live and work, is reason enough to be suspected of tax evasion and treated accordingly. We reject the notion that overseas investing should result in a surrender of due process protections.
If the government wants to access private information in search of a financial crime, it should have to get a warrant just like for any other investigation.
The pursuit of bulk, routine sharing of taxpayer information between nations has become the urgent mission among the tax collector class at the OECD. The U.S. government has already proven incapable of safeguarding the private information of its taxpayers and keeping it out of the hands of criminals as hacks become increasingly common. Yet right now the there is a treaty before the U.S. Senate – the Protocol Amending the Multilateral Convention on Mutual Administrative Assistance in Tax Matters – that would establish the automatic transmission of sensitive financial information between the U.S. and foreign governments likely to have even worse safeguards.
We should not forget the lessons of the Patriot Act, when fear and loathing of one group was exploited to erode individual rights across the board. Time and again we see that easily demonized groups are used to justify infringements upon the rights of all. Then it was terrorists, today it is supposed tax cheats.
Just as those who stood up to government overreach in the pursuit of terrorists were once slandered as traitors, those who resist the aggressive bullying of the tax police are eliciting the ire of governments and their media mouthpieces. But patriotism is not simply siding with the government even as it undermines the principles upon which our nation was founded. When we fight for low-tax jurisdictions and individual privacy rights against the unreasonable demands of the U.S. government and global tax bullies, it is to defend the very ideas that serve as the true source of American patriotism.
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Image credit: TravelingOtter | CC BY-SA 2.0.
