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US Free Market Coalition Attacks Democrat Tax Plans

by Mike Godfrey, for, New York

29 March 2007

44 of the USA's largest and most influential free-market groups have sent a letter urging Treasury Secretary Henry Paulson to "protect America's self-interest" and oppose proposals by Senator Byron Dorgan (D-ND) and Senator Carl Levin (D-MI) that "seek to thwart tax competition and penalize good tax policy in other jurisdictions."

The letter from the Coalition for Tax Competition states, "Senator Byron Dorgan of North Dakota has proposed S. 396, a bill which targets American companies operating in selected low-tax jurisdictions and strips away their ability to postpone the imposition of a second layer of tax on their foreign-source income. Senator Carl Levin of Michigan has proposed S. 681, a bill which imposes a wide range of taxes, regulations, and penalties on American taxpayers operating in selected low-tax jurisdictions. … Both of these pieces of legislation are deeply flawed. They share a common premise that the U.S. government should adopt an adversarial position against jurisdictions with pro-growth tax policy."

The letter details three flaws with the two proposals:

  • Both bills will undermine American competitiveness;
  • Both bills create discriminatory blacklists;
  • Both bills violate America's WTO trade obligations.

"Senators Dorgan and Levin should be ashamed for their discriminatory attacks on less economically developed countries. American lawmakers should encourage more nations in the developing world to adopt pro-growth tax regimes, not penalize them," stated Andrew F. Quinlan of the Center for Freedom and Prosperity Foundation .

The 45 signers of the letter encourage Secretary Paulson and others to reform he United States' tax code so it is more competitive rather than penalize Americans for investing in developing nations with competitive tax systems.

Dan Mitchell of the Cato Institute said: "Senators Dorgan and Levin have managed to combine the worst of all worlds. Their bills hurt U.S. competitiveness, discriminate against developing nations, and violate America's WTO obligations."

Veronique de Rugy of the American Enterprise Institute said: "Rather than blacklisting nations with better tax law, Senators Dorgan and Levin should work to make America's tax system more competitive – even if it means giving up some of their power to redistribute money to favored interest groups."

Grover Norquist of Americans for Tax Reform said: "Instead of behaving like French politicians and trying to blacklist nations with better tax policy, Senators Dorgan and Levin should lower tax rates to encourage more jobs and investment in America."

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