Congress Urged To Rein In OECD's Global Tax Program

by Mike Godfrey, for LawAndTax-News.com, Washington

31 October 2006

Two influential US free-market advocacy groups, the National Taxpayers Union and Americans for Tax Reform, have sent letters to the Congress urging it to retain language inserted in this year's State Department spending bill impeding efforts by the OECD or the UN to introduce global taxation.

At the end of June, the House of Representatives passed the 'Fiscal Year 2007 Foreign Operations, Export Financing And Related Programs Appropriations Bill', HR 5522. It included a provision which would bar the OECD from using the US taxpayer contribution for "activities or projects ... designed to hinder the flow of capital and jobs from high-tax jurisdictions to low-tax jurisdictions or to infringe on the sovereign right of jurisdictions to determine their own domestic policies."

US Senators James Inhofe (R-OK) and Ben Nelson (D-NE) introduced a bi-partisan bill in the Senate with similar language. The bill, entitled the Protection Against United Nations Taxation Act of 2006 (S. 3633) has 32 original co-sponsors and would withhold 20% of the United States subsidy to the UN, the OECD and other international organizations if they develop, advocate, endorse, promote, or publicize any proposal "concerning the imposition of a tax or fee on any United States national or any income earned in the United States in order to raise revenue for the United Nations, any foreign government, or any international organization."

Now Kristina Rasmussen of National Taxpayers Union has written: 'There is a clear need for this provision. American taxpayers provide roughly 25 percent of the OECD's operating budget (around $85 million), and are supposed to receive in return a forum committed to the market economy along with international statistical reports. While NTU questions whether this is worth such a large expense, it is clear that the OECD has repeatedly overstepped its mission by advocating for higher taxes within OECD member countries and against worldwide tax competition. Examples include suggesting the U.S. adopt a value-added tax in October 2006 and endorsing the creation of a global taxation system in May 2005. ...As a grassroots organization dedicated to lowering taxpayer liabilities, we find it particularly galling that Americans are forced to subsidize the very international agencies that would add to citizens' tax bills here at home and make our country a less attractive place to set up shop.'

Grover Norquist, Americans for Tax Reform said: 'I would highly encourage all senators to support your push for accountability at the OECD. ...American taxpayers provide about one-quarter of the OECD's budget. Despite this generous support, the Paris-based OECD has labeled the United States and other low-tax nations as rogue regimes. Capital flows have sought to escape the high-tax regions of Western Europe to other, more reasonably-taxing nations like the U.S. ...The OECD has taken it upon itself to move from an international financial think tank to being the world investment police-and all at the expense of the U.S. taxpayer it denigrates. If we are going to pay for one-quarter of the OECD, we should at least require that they not undermine American sovereignty on tax and financial issues.'

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