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havens. American citizens would not respond well if other countries tried to dictate our

tax laws, and it hardly seems right for us to participate in a campaign to force other

nations to change their tax laws. Likewise it is not our job to tell other countries to

dismantle their financial privacy laws. We should seek cooperation when investigating

specific cases of wrongdoing but this does not require wholesale destruction of personal


This defense of small nations and rejection of the OECD Report has been further

enhanced by the respected conservative think tank The Heritage Foundation. According

to the leading Heritage Foundations expert on Tax Issues Dr Daniel Mitchell the OECD

proposal is filled with ‘double talk and double standards’126 moreover a degree of tax

competition is healthy and is conducive to good governance as governments have to be

more prudent in its expenditure of public funds.

The only way to stop taxpayers from fleeing to lower tax environments, however, is to

have all governments agree to maintain high tax rates in effect establishing a tax cartel.

The creation of a tax cartel may be just the beginning of a process that results in higher

taxes and a more costly government.127

125 126 Supra note 10 OECD Tax Competition Policy Proposal: Higher Taxes and Less Privacy by Daniel Mitchell dated November 6, 2000 and reported in Tax Notes as a special report. 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. Unfortunately, not everyone favors this development. One such grouping that has serious reservations about this phenomenon is the OECD.


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