U.N. Tax Police: On the Beat


U.N. Tax Police: On the Beat

Jan 23rd, 2002 3 min read

Former McKenna Senior Fellow in Political Economy

Daniel is a former McKenna Senior Fellow in Political Economy.
Hold on to your wallet. The United Nations is gearing up for a ritzy get-together at a Mexican resort to discuss ways to pick your pocket.

Specifically, the U.N.'s upcoming "Financing for Development" conference is meant to boost foreign aid spending. To finance their scheme, the bureaucrats want to create a World Tax Organization with the power to impose global taxes.

U.N. bureaucrats still believe that big government is a magic elixir, whatever the ill. They're peddling the same snake oil to the Third World, but their prescription -- more government handouts -- is a recipe for failure. And they want the United States to pick up most of the tab.

Consider the recommendations of a panel the U.N. secretary-general appointed to develop proposals for the Mexico conference. The panel, which included former U.S. Treasury Secretary Robert Rubin, called for:

An International Tax Organization
If you think our tax code is a mess -- and it is -- wait until the same international bureaucrats who rail against "harmful competition" from low-tax nations get their hands on it. Many of these people make the IRS seem like the taxpayer's best friend.

Global Taxes
The United Nations wants the power to levy worldwide taxes, and the panel identifies currency taxes and energy taxes as the most likely targets. Such taxes are designed to do one thing: Redistribute income from developed nations to the Third World. Not surprisingly, they would hit U.S. taxpayers the hardest.

Tax Harmonization
The United Nations wants "information exchange," a form of tax harmonization that would let high-tax nations impose their tax laws on income earned in America. This scheme is supported by an unholy alliance of European welfare states and corrupt Third World regimes.

Emigrant Taxes
Last, but not least, the U.N. panel argues that people should be tax slaves to their country of birth. For example, if a computer programmer from the Third World comes to Silicon Valley, the Third World country, rather than America, would have the primary right to tax his income.

These proposals may sound too ridiculous to be true, but the evidence can be found on the U.N. Web site (links to its report can be found at www.freedomandprosperity.org).

To make matters worse, it appears the United Nations is moving to adopt these radical recommendations. U.N. officials recently released preliminary language they hope will be in the final report. They promised to "give careful consideration … to the results of the study requested by the Secretary-General on possible innovative sources of multilateral finance." Translation: Let's hit up Uncle Sam.

The draft language endorses "international tax cooperation to enhance the scope of national fiscal efforts," which means the United Nations wants to create a tax cartel. This OPEC-for-politicians might be good news for non-competitive socialist governments such as France, but it would undermine America's competitive advantage in the global economy.

The report also calls for a huge boost in foreign aid, up to "the annual equivalent of 0.7 percent of industrialized countries' gross national product." That may not sound like much, but it would cause America's foreign aid spending to skyrocket, from $12 billion a year to more than $70 billion.

And this doesn't even include spending for "global public goods," which U.N. bureaucrats say will require "additional funding." They apparently have a limitless appetite when America is footing the bill.

The U.N. report is also noteworthy for what it doesn't include. The purpose is to boost economic growth in the Third World, but there isn't a single mention of the benefits of tax cuts and lower tax rates, both of which spur economic development. It also fails to discuss the need for governments to control wasteful spending.

The report does briefly highlight the need for free trade. It even makes a veiled endorsement of personal retirement accounts. But these concessions to free-market economics are rare exceptions.

And they can't make up for the real problem, which is that U.N. bureaucrats are ideologically wedded to a big-government view of the world. They want more taxes and more spending, even though these policies make it harder for nations to prosper.

President Bush should tell the U.S. delegates to the Mexico conference to refuse to sign off on this scheme. If other nations want to tax themselves into oblivion, that's their business. But leave us out.

Daniel Mitchell is the McKenna senior fellow in political economy at The Heritage Foundation, a Washington-based public policy research institute.

Distributed nationally on the Knight-Ridder Tribune Wire