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An Open Letter to the United States Congress: Taxpayer-Provided OECD Funds Should Not Be Used to Stifle Tax Competition

October 19, 2006

Dear Member of Congress:

On behalf of the 350,000 members of the National Taxpayers Union (NTU), I write in support of language currently included in the Senate version of the FY 2007 Foreign Operations appropriations bill (H.R. 5522) that would limit the use of U.S. funds for global tax and tax harmonization initiatives.

In particular, Section 577 of H.R. 5522 would prohibit the Organization for Economic Cooperation and Development (OECD) from using any of its U.S.-provided operating monies for projects that "are designed to hinder the flow of capital and jobs from high-tax jurisdictions to low-tax jurisdictions or to infringe on the sovereign right of jurisdictions to determine their own domestic policies." Section 577 would not reduce overall funds available to the OECD, but it would prevent the use of those funds for "we-think-your-taxes-should-be-higher" campaigns.

There is a clear need for this provision. American taxpayers provide roughly 25 percent of the OECD's operating budget (around $85 million), and are supposed to receive in return a forum committed to the market economy along with international statistical reports. While NTU questions whether this is worth such a large expense, it is clear that the OECD has repeatedly overstepped its mission by advocating for higher taxes within OECD member countries and against worldwide tax competition. Examples include suggesting the U.S. adopt a value-added tax in October 2006 and endorsing the creation of a global taxation system in May 2005.

As a grassroots organization dedicated to lowering taxpayer liabilities, we find it particularly galling that Americans are forced to subsidize the very international agencies that would add to citizens' tax bills here at home and make our country a less attractive place to set up shop.

The FY 2006 Foreign Operations appropriations conference report expressed concern with "proposals by international organizations to interfere with the sovereign right of jurisdictions to pursue low-tax policies," but today we need to send a stronger message. We urge you to support retention of the Section 577 language in H.R. 5522 conference negotiations.


Kristina Rasmussen
Senior Government Affairs Manager