In a Strategic Memorandum issued today, the Washington-based Centre for Freedom and Prosperity points out that its ongoing battle for tax competition is not an effort to preserve America’s competitive advantages in the world economy. Rather, it is an effort to promote good tax policy and expand the blessings of liberty for everyone.
**EU Savings Tax Directive**
CFP has been leading the charge in this battle, and organised the lobby against US support for the EU Savings Tax Directive. (see related Industry News items)
Referencing indications that there is “zero support” in the U.S. Administration for signing on to the Directive, CFP says this is good news for low-tax jurisdictions.
Dan Mitchell of the Heritage Foundation — a member of the Coalition for Tax Competition organised by CFP — states that with this threat gone *”tax competition can continue to serve as a liberalising force in the world economy. Governments will feel pressure to lower marginal tax rates and reduce (or even eliminate) discriminatory taxes against income that is saved and invested. Economic growth will rise, opportunity will increase, freedom will be enhanced, and living standards will improve.”*
Notwithstanding its belief that the initiative has been defeated, CFP has called on supporters of tax competition outside the United States to help efforts by pressuring their own governments to reject the EU scheme.
Additional information on CFP’s lobbying efforts can be viewed on the organisation’s web site.
IRS Deposit Income Regulation
Also included in today’s memorandum was an update on the Internal Revenue Service regulation which, if implemented, would force American banks to report the deposit interest paid to non-resident aliens from selected nations. CFP points out that this decision is “*bad for America’s national interests and it undermines good tax policy.”* Enabling other nations to tax income earned in the US will facilitate an additional layer of taxation on income that is saved and invested, claims CFP, who has pledged to oppose this initiative.
The IRS is accepting public comments on the regulation until November, and expects to take testimony in early December. The regulations can be downloaded from www.irs.gov/regs.