US Congress Moves Against Multilateral Funding

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

13 January 2006

Interference in the USA's internal fiscal policies by the OECD, the IMF and the UN has caused serious annoyance among policy-makers at home, and Congress has now included wording in an appropriations report which moves towards restricting funding for anti-competitive international organizations, reports the Institute for Freedom and Prosperity.

The Institute's President, Andrew Quinlan, writes: 'American lawmakers repeatedly have warned bureaucrats at the United Nations not to interfere with American tax law or to try to tax Americans, and now they have extended the warning to the bureaucrats at the OECD. Indeed, the most recent legislative language specifically references the importance of global tax competition, putting the US Congress on record in support of sovereignty for all jurisdictions.

'The Commerce, Justice, State appropriations for the 2006 fiscal year includes report language requiring the State Department to consider the anti-tax competition activities of international organizations when deciding whether to fund these groups. Since the United States funds 25 percent of the OECD, costing taxpayers more than $70 million per year, the bureaucrats in Paris should be very concerned.'

The Commerce, Justice, State appropriations bill report states: "The conferees remain concerned with proposals by international organizations to interfere with the sovereign right of jurisdictions to pursue low-tax policies and direct the Department of State to consider such behavior when reporting whether continued participation in that international organization serves the interests of the United States."

Last month, US free market institutions and pro-business lobbies reacted strongly to an OECD attack on market-friendly incorporation laws in some states of the union at its Global Tax Forum in Melbourne, Australia.

The Paris-based bureaucracy reiterated its opposition to market-friendly incorporation laws and – in a swipe at America – urged nations with federal systems to pressure "political subdivisions" into changing their policies in order to assist in slowing the flight of capital from high-tax nations to lower tax regions.

Several members of the Coalition for Tax Competition condemned the OECD for attacking America's federal system, and also expressed their concern that the Treasury Department delegation at the Melbourne conference acquiesced to the attack.

Andrew Quinlan, President of the Center for Freedom and Prosperity Foundation, stated: "Since the United States is the only nation with a decentralized system for incorporating companies, it does not take a Sherlock Holmes to figure out that the OECD is targeting Delaware, Nevada, and other states. It is very disappointing that the Treasury bureaucrats at the meeting allowed this attack on America's Constitutional system."

In November, US members of the Coalition for Tax Competition slammed the OECD for the conclusions drawn in its recently published Country Survey of the United States.

In the report, the OECD observed that "some increase in revenues will be necessary" and that "a federal VAT should be considered", and further suggested that "retaining a personal income tax would allow the desired degree of progressivity of the overall tax system to be achieved".

Speaking with regard to the report, Andrew Quinlan observed:

"Here we go again. Once again the OECD is pushing on the US their Euro-centric, anti-American economic policies. It is time for the President and Congress to re-evaluate America's annual subsidy to the OECD. In fact, we should cut our contribution greatly, or zero it out all together."

Meanwhile, Daniel Mitchell, senior fellow at the Heritage Foundation, suggested that:

"A VAT would mean bigger government and economic stagnation. The OECD is supposed to recommend policies that increase growth, not policies that increase government. It is encouraging that Congress is finally reconsidering the wisdom of having US taxpayers subsidize the Paris-based bureaucracy."

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