OECD Tax Bureaucrat Admits Tax Competition Leads to Better Tax Policy

The Organization for Economic Cooperation and Development is infamous for its anti-tax competition campaign. Acting on behalf of uncompetitive nations such as France and Germany, the Paris-based bureaucracy even has a blacklist of low-tax jurisdictions and wants those “tax havens” to be subjected to financial protectionism. Yet a top OECD tax official just confessed that tax competition is driving tax policy in the right direction by pressuring governments to lower tax rates, as noted in this Thomson Financial News report on the Forbes website:

Chistopher Heady, head of the OECD’s centre for tax policy and administration said…whilst corporate tax rates have fallen in Europe, revenues have not. ‘It is likely that corporate tax revenue will eventually start falling,’ he said at the Brussels Tax Forum. He said that combined with decreasing tax income from high earners…this could lead to a combination of taxes which would be more beneficial for GDP growth. ‘The pressures of tax competition may lead to a tax mix that is better for growth,’ he said.

The OECD logic is remarkable. The bureaucrats admit that tax competition is producing positive results. Heck, an earlier OECD report admitted that “the ability to choose the location of economic activity offsets shortcomings in government budgeting processes, limiting a tendency to spend and tax excessively.” Yet rather than celebrate tax competition as a liberalizing force, the bureaucracy wants to sanction and penalize jurisdictions with pro-growth tax systems.

Dispatch from the ASIL Annual Conference

Wednesday afternoon marked the beginning of the 102nd meeting of the American Society of International Law (ASIL).  ASIL is a venerable organization that takes international law seriously, inviting vigorous discussion and rigorous study of a panoply of issues.  Which is not to say that its members don’t skew in a particular way on many issues of the day.  Generally speaking, cosmopolitans and those who study and promote international law – especially in academia – are toward the left side of the political spectrum.  A left-wing bias in this field means a favorable disposition toward universal norms, global jurisdiction by a world court, and otherwise the imposition of elite consensus on domestic courts and polities.  Still, the ASIL membership is not nearly as bad in those tendencies as, say, the ABA’s international law practice group – and, as I said, it invites speakers and writers from a variety of perspectives.  Moreover, a fair bit of ASIL’s activities relate to private and commercial international law, with which libertarians should have little beef.

In any event, this year’s conference kicked off with the tenth annual Grotius Lecture, given by Jordan’s ambassador to the United States, Prince Zeid Ra’ad Zeid Al-Hussein.  Prince Zeid, educated exclusively in the West, has had a truly distinguished career, and seems to be a voice of enlightenment from a dark part of the world.  His remarks, however, on the topic “For Love of Country and International Criminal Law,” skewed both technocratic and rhetorical: He implored the world community to overcome legal obstacles to helping the victims of genocide and war crimes while at the same time recognizing that international courts are not welfare agencies.  And of course, somehow, yes somehow, we have to reconcile somewhat outmoded notions of sovereignty with a brave new world of globalized crime.  I don’t pretend to give his lofty discourse justice, but in the end it was both intellectual and bland.

What was not bland was the commentary of the good prince’s discussant, David Scheffer of Mayer Brown and Northwestern University Law School.  Prof. Scheffer, a high-ranking official in the Albright State Department, first drew a round of applause by announcing that the previous speaker was, without doubt “a future Secretary-General of the United Nations.”  (Sounds about right.)  Then he crescendoed into an excoriation of pretty much every lawyer in the Bush administration for ignoring international law and making the United States into the red-headed stepchild of the community of nations.  Again, it would take more time than it’s worth to fisk his entire approach but suffice it to say the learned professor seems to have a hard time distinguishing law from policy and politics.  There is much for which to criticize the Bush administration, but violating international law wouldn’t make my top 100 list.

And that is where the rubber hits the rubber on so many of these issues: Much, if not most, if not all, of international law comes down to diplomacy – the willingness of countries to adhere to their obligations and convince others to do so.  As described by Jack Goldsmith and Eric Posner in their brilliant book The Limits of International Law, the behavior of nation-states cannot be predicted, and should not be judged, based on whether they sign this piece of paper or that one.  For example, states have interests and there is no international mechanism to force states to comply with treaties that at any given time contravene those interests.  Period.  (It is often in their interest to comply with their international or binational obligations, of course, because few states want to become, literally, pariahs.)  There is so much to say on this, and I will certainly be writing about it in future.

And when it comes to the International Criminal Court (ICC) – the chief bone of contention that many of the attendees to this week’s conference have with the American practice of public international law – what’s important is that U.S. troops treat people much better than their Congolese or Indonesian or Venezuelan counterparts, regardless of which countries submit to the jurisdiction of the ICC.  That’s some reality-based law for you.

In sum, an eyebrow-raising start to the conference – and a reminder of the strange position of those of us interested and educated in international legal and political issues but skeptical of public international law.

New at Cato Unbound: Can the Schools Be Fixed?

In April of 1983, the Ronald Regan-appointed National Commission on Excellence in Education released a landmark study, “A Nation at Risk: The Imperative for Educational Reform,” which diagnosed the ills of American education and set forth a list of prescriptions for fixing what seemed to be flailing educational system. It’s been twenty-five years now since the report. So how are we doing? And what, if anything, should we be doing differently? These are the questions we’ll be asking in this month’s edition of Cato Unbound, Can the Schools Be Fixed?

This month’s lead essay comes from Richard Rothstein, a former national educational columnist for the New York Times and research associate of the Economic Policy Institute, who offers a fresh, critical assessment of “A Nation at Risk” and the lessons we can draw from its fate. The public schools aren’t as bad as many think, Rothstein argues, and the report oversold the importance of the education system for America’s economic competitiveness and success.

Today, Michael Strong, co-founder of FLOW, education entrepreneur, and former charter school principal, chimes in with a stirring brief for the freedom to innovate in education.

Stay tuned for contributions from Sol Stern, a senior fellow at the Manhattan Institute who recently made waves with his article “School Choice Isn’t Enough,” and from Frederick Hess, the director of Education Policy Studies at the American Enterprise Institute.

If that’s not enough for all you education reform junkies, be sure to tune in to next week’s Cato forum on “Markets vs. Standards: Debating the Future of American Education.” You’ll learn something.

Shameless, Feckless Cowards

Further to yesterday’s post, rather than have a vote on the U.S.-Colombia Free Trade Agreement within 90 legislative days (as set out by law), House Speaker Nancy Pelosi announced that she will change House rules to avoid having a vote on the agreement before the November elections. It’s not yet clear to me how that can be done, but such action will speak volumes about the rudderless Democratic Party.

Apparently, the leadership hasn’t decided whether supporting the agreement—supporting export opportunities, encouraging and deepening business ties, promoting investment in Colombia, supporting an ally in a hostile region, and preserving the value of U.S. credibility—is worth more votes than union money can buy.

If members of Congress don’t want to be held accountable to the electorate, they shouldn’t seek office in the first place. But as we’ve seen time and again, it’s never about good policy. It’s only about holding onto power. No wonder Americans have such contempt for Congress.

John Yoo’s Neoconstitution

I’ve read through most of the John Yoo torture memo released last week (Part 1, Part 2 [.pdfs]). As I’d gathered from the news reports, there’s not much new here: the core of the argument has been known since at least 2004, with the release of the infamous August 1, 2002 torture memo, also drafted by Yoo. At the Justice Department’s Office of Legal Counsel from 2001 to 2003, Yoo was the key figure in advising the executive branch as to the limits–if any–to its powers. As Georgetown’s David Cole has put it, Yoo “was the right person in the right place at the right time…. Here was someone who had made his career developing arguments for unchecked power, who could cut-and-paste from his law review articles into memos that essentially told the president, ‘You can do what you want.’”

In the memo released last week, once again we see a breathtakingly narrow interpretation of what constitutes torture under US law. To rise to the level of torture, the abuse must, Yoo argues, inflict pain equivalent to that associated with “death, organ failure, or serious impairment of body functions.” Presumably, the rack qualifies under that definition, but hey, what about the thumbscrew?

Such questions ultimately don’t matter much under Yoo’s analysis, because, in his view, Congress lacks the constitutional power to prevent the president from ordering torture: “Any effort by Congress to regulate the interrogation of enemy combatants would violate the Constitution’s sole vesting of the Commander-in-Chief authority in the President.” As Yoo sees it, telling the executive branch not to abuse prisoners is like telling the CINC what weapons can be used to take a hill occupied by the enemy: “Congress can no more interfere with the President’s conduct of the interrogation of enemy combatants than it can dictate strategic or tactical decisions on the battlefield.”

One of the problems Tim Lynch and I experienced talking about our 2006 paper on the administration’s constitutional theories is that when you describe the implications of those theories in calm, sober tones, people tend to think you’re being strident and hysterical. Luckily John Yoo is willing to serve as his own reductio ad absurdum. If you don’t have the time for an 81-page memo, try this short, cringe-inducing YouTube clip:

Let’s stipulate that neither the rack, the thumbscrew, nor testicle-crushing have been tactics approved of nor employed by the US government in prosecuting the war on terror. The tactics we’re talking about–stress positions, sleep deprivation, waterboarding, and the like–are far less dramatic. Under the Yoo theory, though, those tactics and more are available for use even against American citizens accused of terrorist involvement. And reading the latest memo, with its detailed and tendentious discussion of what might be permissible under existing law (assuming existing law exists), it’s hard not to be reminded of US citizen Jose Padilla’s claim that during his confinement he was subjected to stress positions, forced hypothermia, and mind-altering drugs. Was Padilla making it up? Quite possibly. We’ll likely never know. At one stage of the Padilla case, asked by Justice Ginsburg whether the administration’s theory would permit torture, then-deputy solicitor general Paul Clement answered:

You have to recognize that in situations where there is a war – where the government is on a war footing – that you have to trust the executive to make the kind of quintessential military judgments that are involved in things like that.

John Yoo has written, unironically, of “the president’s right to start wars.” Coupled with the other elements of the Yoo theory–which is to say, the Bush administration’s constitutional theory–the result is a jaw-dropping doctrine of unchecked presidential power. When we’re at war, anything goes. And the president gets to say when we’re at war.

Maybe the Surge Isn’t Working

Via Glenn Greenwald, a Rasmussen poll released yesterday indicates that support for withdrawing from Iraq has reached an all time high. 26% of Americans support leaving “immediately,” 39% want U.S. troops home within one year, not contingent on conditions, and 31% want to stay until “the mission is complete.” So 65% of Americans want US troops out of Iraq within–at the outer bound–one year. 31% support the McCain strategy of staying indefinitely.

Two main purposes of the Surge were, in the words of Thomas Donnelly, to “redefine the Washington narrative,” and as White House adviser Peter Feaver put things, to “develop and implement a workable strategy that could be handed over to Bush’s successor.” This can’t look too good for these folks. It speaks volumes, on the other hand, about the wisdom of the American people.

The Vote: Ease? Security? Or Enough Already?

The Universal Right to Vote by Mail Act of 2007 (H.R. 281) recently passed the House Committee on House Administration. It would amend the Help America Vote Act of 2002 to require states to allow eligible voters to request a mail-in ballot for all federal elections without having to provide a reason.

In a TechKnowledge piece called “Voter ID: A Tempest in a Teapot that Could Burn Us All,” I shared some thoughts that are relevant to this bill:

Increasing voter participation has been a policy fetish for the last decade or two-never mind whether more voting for its own sake makes a better democracy… . The growth in absentee balloting has undone some of the protections against voter impersonation and multiple voting that previously existed. People are much more reticent to commit fraud in person - it’s riskier - so in-person voting was a natural security against impersonation fraud. Voting in multiple jurisdictions is simply too time-consuming to do on any scale when it has to be done in person.

The bill would require states to verify signatures on absentee ballots by cross-checking them with voters’ signatures on the official list of registered voters, but this only begins to shore up the security hole opened by mass absentee balloting.

The people who want this bill undoubtedly believe it will improve both the political discourse and their electoral prospects. Folks on the other side - the proponents of identification requirements for voting - will only be energized by these efforts, which lower the bar for both legitimate voting and for voter fraud.

Both sides should just drop this food-fight-to-the-death and work on substantive policies that they believe will win voters to their sides. Hopefully, those policies are centered on limited government, free markets, and peace.