The OECD and EU Are Wrong: Tax Competition Should Be Celebrated, Not Persecuted

Abstract

Globalization is making it harder for governments to overtax, because it is increasingly easy for taxpayers to shift their productive activities to lower tax environments. This is what is known as tax competition. But not everyone favors this development, particularly international bureaucracies. The Organization for Economic Co-operation and Development (OECD), a Paris-based organization with 30 member nations from the industrialized world, has urged an end to „harmful tax competition.“ The European Union also has an anti-tax competition project, and its „savings tax directive” may be the most dangerous of all tax harmonization initiatives. Last but not least, the United Nations has proposed an „International Tax Organization,“ which would be responsible for dictating global tax policy.

A spectre haunts the world’s governments. They fear that the combination of economic liberalization with modern information technology poses a threat to their capacity to raise taxes. The Financial Times, July 19, 2000