Competition is Healthy
US Turns Down Anti-Competition Cartel
| Surprisingly good news! The Bush administration is saying "No" to an international tax cartel. |
Barbara Angus, an international tax official at the Treasury Department, told delegates to the Organization for Economic Cooperation and Development that Washington was no longer interested in cooperating on key elements of the "Harmful Tax Competition" initiative, U.S. officials said.
The U.S. officials said Washington would participate in a more limited effort, but they acknowledged that their move had essentially gutted the effort. Treasury Secretary Paul O'Neill said, "The United States does not support efforts to dictate to any country what its own tax rates or tax system should be and will not participate in any initiative to harmonize world tax systems."
This policy reversal is a disappointment for high-tax European allies.
Defenders of the initiative argue that it was not intended to "harmonize" tax rates, but it is clearly a step in that direction. The effort, several years in the making, is devised to penalize countries whose taxes are low, and to discourage experiments with better, reformed tax systems.
Other OECD countries may choose to continue without the United States, but the initiative would be limited without participation by the world's largest economy.
Opponents of the broader OECD effort have always said the effort to compel tax havens to disclose more information would make it easier for all countries to raise taxes.
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