Mitchell Argues Against EU Savings Tax Directive, For Flat Tax

by Mike Godfrey, Tax-News.com, Washington

17 July 2002

Heritage Foundation Senior Fellow, Daniel Mitchell has once again called on the Bush administration to reject the European Union's Savings Tax Directive, arguing that it would create 'a tax cartel - an OPEC for governments'.

Writing for the National Review Online, Mr Mitchell argued for the introduction of a flat rate tax in America, and against the EU's 'tax harmonization' plans:

'All tax reform plans eliminate excess layers of tax on income that is saved and invested, but the 'savings tax directive' is explicity designed so that high tax governments can more easily impose a second layer of tax,' he asserted, concluding that:

'This is why the Bush administration must tell the European Union that America has no interest in participating in the 'savings tax directive'. We don't want international bureaucracies to rewite the rules of taxation and interfere with our right to reform our tax system.'

In terms of reforms necessary to the US tax system, the Heritage Foundation fellow argued in favour of a flat tax rate in order to remove the bias in the US tax code against money which is saved or invested, rather than consumed.

'A flat tax...would solve all of the major problems caused by the internal revenue code,' the tax campaigner wrote this week. 'Discriminatory and excessive marginal tax rates would be replaced by a single, low tax rate. Savings and investment no longer would be double-taxed. And tax reform would significantly improve the competitiveness of US companies by scrapping the taxation of worldwide income and instead taxing only income earned inside America's borders.'

Mr Mitchell also maintained that the introduction of a flat tax rate would increase financial privacy for law-abiding US citizens, as the IRS would no longer need to be privy to assets held by US taxpayers.

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