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InsiderOnline Blog: June 2011

The World Taxman Cometh

The Organization for Economic Cooperation and Development continues to pursue its agenda of “harmonizing” tax codes (read: shielding high-tax jurisdictions from losing their tax base). Dan Mitchell reports that at the recently concluded Global Tax Forum in Bermuda, the OECD has “unveiled a new scheme that effectively would result in the creation of something akin to a World Tax Organization”:

The vehicle for this effort is a Multilateral Convention on Mutual Administrative Assistance in Tax Matters. This may sound dry and technical, but the OECD wants all nations to participate in this pact, which has existed for a couple of decades but was radically expanded last year to give high-tax governments sweeping new powers to impose bad tax law on income generated in low-tax jurisdictions.

But the real smoking gun is that the OECD has put itself in charge of a “co-ordinating body” that will have enormous powers to interpret the agreement, modify the pact, and resolve disputes – thus giving itself the ability to serve as judge, jury, and executioner. [“With the Support of the Obama Administration, Paris-Based OECD Now Wants De Facto World Tax Organization as Part of its Anti-Tax Competition Campaign,” International Liberty, June 1, 2011.]

American taxpayers, says Mitchell, can expect higher taxes, as the competition to attract businesses with lower taxes would be undermined; individual taxpayer data falling into the hands of repressive and corrupt regimes such as Azerbaijan, Moldova and Mexico which have already agreed to the multilateral convention; a loss of sovereignty, as the convention “outlaws certain pro-growth tax policies and discourages others” while creating “a system allowing foreign tax collectors to cross borders”; and “an assault on all forms of tax planning, with American companies almost sure to be among the first to be in the OECD’s crosshairs.”

Posted on 06/01/11 07:54 PM by Alex Adrianson

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