Daniel J. Mitchell
Though it gets strong competition from the International Monetary Fund, the Organisation for Economic Co-operation and Development wins the prize for being the worst international bureaucracy.
The Paris-based organization is infamous for pushing a statist agenda on a wide range of issues, including class-warfare taxation, energy taxation, business taxation, value-added taxes, Keynesian spending, green energy, and government-run healthcare.
And it relies on dodgy, dishonest, and misleading data when pushing big-government policies regarding poverty, pay equity, inequality, and comparative economics.
But what gets me most agitated is the OECD’s attempt, beginning in the late 1990s, to prop up decrepit welfare states by undermining tax competition.
To make matters worse, American taxpayers finance the lion’s share of the OECD’s statist agenda. Eliminating subsidies for the OECD arguably would be the budget cut with the greatest value per dollar saved.
Which is the point of some new research from the Heritage Foundation. James Roberts and Adam Michel make a strong case that the OECD is using handouts from American taxpayers to push policy that are contrary to U.S. interests. They write:
“The Organisation for Economic Co-operation and Development (OECD) … has transformed itself into a dunning agency for European mega-welfare states that are straining to fund the generous but unsustainable pension, healthcare, and other government programs they have over-promised to their constituents. One need only undertake a cursory examination of research over the past five years to see that tax-related work by the OECD’s Centre for Tax Policy and Administration and by other OECD directorates (for example, on carbon taxes) has been focused almost entirely on studies that buttress political arguments for higher taxes and implementation of more intrusive ways to collect them …. high-taxing European members of the OECD have pushed the organization toward an almost obsessive research focus on international tax avoidance and evasion. These manifest through its base erosion and profit shifting (BEPS) project, and a proposed protocol amending the Multilateral Convention on Mutual Assistance in Tax Matters …. The BEPS project also complements a disproportionate OECD focus on income inequality … that, in the eyes of OECD’s international civil servants, could be addressed best by international wealth redistribution schemes … The Trump Administration should consider whether U.S. taxpayers should continue to subsidize an organization that increasingly acts contrary to the expressed wishes of a significant number of Americans, who voted into office in 2016 a government with a mandate to cut government spending and reduce taxes. It could decide to withdraw the United States completely from the OECD.”
I normally would exclaim “amen” at this point, except the folks at Heritage are being far too nice, writing that the White House “should consider” whether to subsidize the OECD and noting that the U.S. “could” withdraw from the Paris-based bureaucracy.
I’m in no mood for diplomatic niceties when dealing with an organization that is pervasively hostile to economic liberty. The OECD is beyond salvage. If Republicans had any brains (yes, I realize that the GOP is known as “the stupid party” for good reason), handouts would have ended last decade.
I’ll close with an example of the OECD’s perfidy.
From the moment the bureaucracy’s anti-tax competition project began about 20 years ago, I explained that the OECD was seeking to destroy financial privacy so that uncompetitive governments could track capital and impose high tax rates on income that is saved and invested. In effect, the battle over “tax havens” and “tax competition” were a proxy for whether there should be more double taxation and more extra-territorial taxation.
Were my suspicions warranted? Well, see what the bureaucrats just wrote in a report on the taxation of household savings:
“… opportunities may exist … to increase progressivity in the … taxation of capital income as a result of major changes to the international tax environment …. the recent move toward the automatic exchange of financial account information between tax administrations is likely to make it harder … for taxpayers to evade tax by hiding income and wealth offshore … This may present a particular opportunity for countries that previously moved away from progressive taxation of capital income (due to concerns regarding such tax evasion) to reintroduce a degree of progressivity.”
In other words, now that the OECD has succeeded in greatly weakening financial privacy, the bureaucrats openly admit that the real goal was to make it possible for uncompetitive welfare states to impose higher tax burdens on saving and investment. I’m shocked, shocked.
To add more insult to all the injury, the tax-loving bureaucrats at the OECD get tax-free salaries. Must be nice to be exempt from the bad policies they support.
Daniel J. Mitchell, chairman of the Center for Freedom and Prosperity, is on the Editorial Board of the Cayman Financial Review.