Remarks from Donald Johnston below:
I should tell you that the OECD began the program with a misnomer, calling it “harmful tax competition”, which, as I recall, was the language actually used in the résumé from the G-7 at the Lyon summit. They used the term “harmful tax competition”.
Well of course that opened the door to those who like to charge the OECD as being a European-controlled organization where people like to pay a lot of tax, where the social contract is financed with taxpayers’ dollars at exorbitant rates. They like to charge that the OECD—when it refers to tax competition—is really saying that everybody should pay the same tax. Well of course nothing could be further from the truth. I don’t know if Jeffrey Owens testified on this point or not, but the OECD, from an economic point of view, had regarded competitive tax rates as being very healthy and that they could be very efficient. So the notion of competition in tax, which backfired in terms of the initial communications on this program, was corrected in 2000 and it became essentially “harmful tax practices”.
But the opponents of the OECD work continued, of course, to harp on the theme that it was really a European-dominated organization with a totally different view of the relationship between the individual and the state and the social contract, and that the OECD was set on creating uniformity in taxation all over the world. Some of the most outspoken critics were in the United States. The Heritage Foundation—the tax part of which was led at that time by a man called Dan Mitchell—frequently published in newspapers in the United States attacks on the OECD to the point where I had to go to Washington to meet with senatorial staff and senators to explain the program. Some of them were threatening to cut off funding to the OECD, which of course would have buried the OECD, since the United States contributes 25% of the budget. That’s changed somewhat, but not very much. But at that time it was a statutory obligation that in the OECD they paid 25%. Even under the formula of contributions it would have been much more because of the size of the economy.
On the other hand, we had strong support from some senators, such as Senator John McCain and others, who realized how important this work was. And similarly, in most of the treasuries around the world they realized how important this work was.
This was Donald Johnston speaking in front of the Finance Committee back in Febuary 2011. Not a single MP at the time said anything to challenge him although OVDI 2011 was yet to come. I love the remarks about John McCain as it goes totally with my previous impression of the guy.
*I have never met Jeffrey Owen, but I have met Dan Mitchell. Dan’s views on taxation are, I know, diametrically opposed to those of OECD which favors the same sort of uniform taxation for all member countries so there will be no competiton based on taxes.
Dan’s position is that competition with takes is just as important as free enterprise competiton is good for economic growth and prosperity. Dan strongly favors the concept of territorial taxation over world-wide and citizenship bases taxation. In that view I totally agree with Dan.
Look at the name in long form: “Organisation for Economic Co-operation and Development”.
The US doesn’t seem very interested in developing its economy much: the infrastructure is horrid and the roads are falling apart, there is no proper healthcare system in place and the US continually ranks very poorly in educational rankings (not university rankings obviously), not to mention the many other development indexes that we are all aware of. Sure, the US is rich, but what does it have to show for its wealth? It invests in all the wrong areas and squanders money on expensive military adventures. I see no evidence of “development”.
In terms of “economic cooperation”, I think that most of us know that that is laughable and translates as the US bullying everyone else into compliance with its global financial order and FATCA.
I would argue that the US has no business being in the OECD: It is neither a developed country nor does it cooperate with its partners!
*But from the remarks it does appear that the US pays about 25% of the OECD’s budget.
The OECD wants to redefine the language used so they can control the tone of the conversation to try to sway people in their direction. Competition is a good thing. I think they know that the world at large realizes this, which is why they wanted to change ‘harmful tax competition’ into ‘harmful tax practices’. It’s similar to how Congress names bills in a manner with is exactly opposite of their actual effect–e.g. The Patriot Act (in reality takes away your freedoms). Sadly, it’s a strategy that works. Which is why we should try to use accurate language ourselves though, so they don’t define the language of the entire conversation.
I must say, I find it sick that the people at the OECD who seek to raise taxes on everyone else, pay no income taxes themselves. How hypocritical and immoral.
“Emoluments (basic salary and allowances) are payable in arrears,
with the exception of the installation allowance which is payable on
taking up duty.
Emoluments are exempt from taxation in most Member countries of the Organisation, including France.”
http://www.oecd.org/careers/salariesandbenefits.htm
See, I read ‘harmful tax competition’ as multiple countries trying to tax individual taxpayers, with the country the taxpayer lives in feeling aggrieved at the rival government.
*@A broken man on a Halifax pier: What Mitchell means by tax competition is countries competing tax-wise for investment that results in economic growth. And that is healthy. Mitchell believes that each country should be the exclusive taxer of income earned or created in that country in the way decides is appropriate. The better the tax deal the more money is going to be invested in the countries with the best tax climates. Funds would flee from countries that are very heavy-handed with their tax policies.
Candians and every one else, would be taxed by Canada on income earned in Canada, but not on inome earned in another county. It would be the exclusive perogative of other countries to determine how money earned in those countries would be taxed.
All other nations would be prohibited from taxing that already-taxed-once income. I agree with Mitchell 100%. This is pure residence-based territorial taxation.