NCPA - National Center for Policy Analysis

Sanctions for "Unfair Tax Competition"?

July 3, 2003

The European Union and the OECD (Organization for Economic Cooperation and Development) are threatening sanctions against six countries for "unfair tax competition." The complaint is that these countries have lower tax rates than EU countries, and are attracting savings and investment from high tax countries.

Interestingly, notes economist Richard Rahn, these unfair competitors are also the economically freest and most prosperous countries.

  • According to new data just released by the World Bank, the six economies that have the highest per capita income (on a purchasing power parity basis) are Luxembourg, Liechtenstein, the United States, Bermuda, Switzerland and the Cayman Islands.
  • These six are all free-market democracies with a high degree of economic freedom and personal liberty.
  • They all provide strong protections for private property and have low levels of corruption, honest and independent judicial systems, relatively small black markets, and very low levels of poverty.

The European political establishment is demanding that the "top six" raise their tax rates and share taxpayer information. In the past, they have complained about Germany and Ireland lowering their tax rates.

Source: Richard W. Rahn (Discovery Institute, Cato Institute), "Global greed screed," Washington Times, July 3, 2003.

 

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