(English) Letter from Dr. Eduardo Morgan Jr. to the Director of the Centre for Tax Policy and Administration of the OECD, Jeffrey Owens

June 2, 2011 

Mr. Jeffrey Owens
Director
Centre for Tax Policy and Administration
OECD

Dear Mr. Owens:

I would like to reiterate that the real international standard is not what the OECD preaches “transparency and effective exchange of information”.    Quite the contrary, it is what the US practices, “Fiscal Competition and Respect for Individual Privacy”.   

As you are probably aware, the past few months have been of strong opposition in the U.S. to the proposed IRS regulation (REG-146097-09), which requires reporting interest paid to foreign account holders on bank deposits, to be turned over to foreign governments.     Senator Rubio´s open letter to President Obama; the letter sent by the 25 members of the Florida Delegation to the U.S. House of Representatives, as well as several other Organizations, are urging the withdrawal of this regulation.   The main concern, as stated, is that if this regulation is not withdrawn, Florida banks, as holders of substantial deposits from Latin America, would be hard hit, and this could drive job-creating capital out of America.   Indeed, this proposed IRS regulation would send the message to existing and potential foreign depositors that the U.S. is no longer a secret jurisdiction. https://www.freedomandprosperity.org/FL-Delegation-03-02-2011.pdf.

The  U.S. is not only the most important member of the OECD, but also the indisputable leader of the G20, Organization that holds the most developed economies of the planet.   By all accounts, the US is the most highly developed country in the world, precisely, due to its military and economic power, as well as its cultural dominance.   As a result, the U.S. exerts the strongest influence upon other nations policies, particularly, economic policy.    Economic and political development relies strongly upon the fundamental pillars of competition and respect for private initiative and individual privacy.   The strength of these core principles became most evident during the downfall of those systems centered on planned economies, which ended up with the derailment of the Soviet Union and its allied nations.

Undoubtedly, the U.S. does not honour the OECD standard of “transparency and effective exchange of information” when dealing with other nations, but rather promotes fiscal competition and the right to privacy of individuals as a key developmental factor for protection from abusive tax regimes.  If all the OECD main members share this same philosophy, the true international standard ought to be one of fiscal competition and private individual rights.    Therefore, there can be no other interpretation to the “transparency and effective exchange of information”, than being a poor excuse which seeks to eliminate the competition that small countries might pose to the OECDs cartel members. There is no room for double standards in a global economy.

Regards,

Eduardo Morgan Jr.

Lawyer, Former Ambassador of Panama in Washington DC