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Mitchell Heritage Foundation December 22, 2003 Many politicians seem to think that the answer to every alleged problem is higher taxes. Howard Dean, for instance, has said he would repeal the Bush tax cuts - even though this would boost the average familys tax burden by nearly $2,000. The United Nations, for instance, wants to create an International Tax Organization ITO that would have the power to interfere with national tax policies. This crazy idea first surfaced two years ago in a report from the world bodys High-Level Panel on Financing for Development. Since then, the United States has been working to turn it into reality. For instance, United States General Secretary Kofi Annan recently called for the creation of a global tax commission. But no matter what its called, an international bureaucracy with power over tax policy would be an assault on American sovereignty. An international tax organization, of course, would mean higher taxes and bigger government. Indeed, United States officials have been quite open about their intentions. The chairman of the United States panel that first endorsed the creation of an ITO said that it would take a lead role in restraining tax competition. According to this mentality, its unfair for America to have lower taxes than places such as France and Germany, especially if it means that jobs and investment flee Europes welfare states and come to America. For all intents and purposes, the United States wants to create an OPEC for politicians. Governments would conspire to keep taxes high, and countries with free-market tax systems - such as the United States, Switzerland, Ireland and Hong Kong - would be targeted for persecution. The original report looked at two options, a tax on currency transactions and a tax on energy consumption. In the past, the United States has endorsed new taxes on the Internet, including a tax on e-mail. Again, the United States economy would pay the lions share if this reckless idea took effect. But the prize for the worst United States idea probably belongs to the proposal to give governments permanent taxing rights over emigrants. You see, the United States thinks its unfair when talented people leave high-tax socialist nations and move to places such as America. But since even the United States realizes it would be unacceptable to prohibit emigration, the bureaucrats are instead proposing to let governments tax income earned in other nations. This scheme is a direct attack on American interests because of our high levels of immigration - particularly the well-educated portion of the immigrant population. For instance, if a doctor from the Caribbean moves to America, his home government would get to tax income he earns here. If a Chinese entrepreneur moves to Silicon Valley, the Chinese government would get to tax his United States income. Foreign-born workers in the United States, including both citizens and resident aliens, earn nearly $600 billion each year. Even if they imposed only a 15 percent tax rate, foreign governments could drain nearly $100 billion from our economy. There is an understandable temptation to dismiss these United States proposals as silly. What would happen, say, if Howard Dean were president when the United States was voting whether to create an International Tax Organization? Another reason we should worry: The United States is just one of several international bureaucracies working to undermine fiscal sovereignty. The Paris-based Organization for Economic Cooperation and Development OECD targets harmful tax competition and the Brussels-based European Union enthusiastically backs tax harmonization. Whats particularly troubling is that United States taxpayers are footing the bill for much of this nonsense. We dont belong to the European Union, but we pay 25 percent of the costs at the United States and the OECD.
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