US Senate Votes For Tax Competition

Tax-News.com, Washington

30 November 2001

On November 15, reports the Centre for Freedom and Prosperity, the U.S. Senate went on record in favor of tax competition between political jurisdictions, voting 57-43 to kill an amendment that would have given U.S. states the authority to create an OECD-like tax cartel for the purpose of taxing transactions that take place outside their borders.

This vote was a huge victory for supporters of tax competition. The issues in this debate are virtually identical to the issues revolving around the OECD and EU tax harmonization schemes. High-tax American states are upset that consumers are buying products from businesses in low-tax states. The high-tax states wanted businesses from low-tax states to participate in a mandatory "information exchange" system so they could tax any out-of-state purchases (much as the OECD and EU want "information exchange" to tax out-of-country investments). Fortunately, the US Senate voted to kill this misguided initiative.

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