Jesse Helms's letter to Paul O'Neill
about the OECD blacklist

February 14, 2001
The Honorable Paul H. O'Neill
U.S. Secretary of the Treasury
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Dear Mr. Secretary:

[1] In as much as the State Department authorization legislation includes appropriations to the Organization for Economic Cooperation and Development (OECD), the Senate Foreign Relations Committee therefore has an interest in what the OECD accomplishes and in the efficient functioning of this international organization.

[2] However, I have great concern that the OECD may be seeking to undermine the ability of nations to adopt market-based tax regimes.

[3] With the encouragement of your predecessor, Secretary Summers, the OECD has been pursuing a project to fight allegedly "harmful tax competition." This project produced, for example, the perverse January 26, 2000, report "Toward World Tax Cooperation," strongly critical of so-called "tax havens."

[4] But, Mr. Secretary, I find troubling that the OECD threatens many low-tax countries simply because they are luring investment away from high-tax nations. I believe this to be economically unwise and morally questionable.

[5] I am especially troubled by the foreign policy implications of the OECD's campaign (e.g., that the U.S. has supported an international effort to stigmatize low taxes). I am confident that you share my view that nations should have the right to choose the tax and the privacy laws that are most likely to promote economic development.

[6] If high-tax countries are worried that they are losing their tax base, the proper response is their lowering their tax burdens rather than trying to force low-tax nations to raise tax rates or to serve as vassal tax collectors.

[7] Most importantly, lower tax rates and pro-growth tax reforms are key determinants of a developing economy's performance. A modest tax burden obviously rewards entrepreneurial initiative and attracts investment, leading to rising income levels and broadly-shared prosperity.

[8] Such economic\ policies lead to growth in developing nations (and they can become less reliant on foreign aid).

[9] I hope you will address this misguided OECD policy, perhaps including at upcoming international meetings. In any event, America should not be bound by misguided decisions of the previous administration to allow such wrongheaded OECD initiative's to continue.

[10] Kindest regards!

Sincerely, JESSE HELMS

United States Senate

Washington, D.C.