May 31, 2001

The Honorable George W. Bush
President
The United States of America
1600 Pennsylvania Avenue, N.W.
Washington, DC  20500

Dear President Bush,

      We, the undersigned economists, urge you to reject the Organization for Economic Cooperation and Development's so-called "harmful tax competition" initiative. According to the OECD, it is unfair for low-tax countries to attract jobs, capital and entrepreneurial talent away from high-tax countries. To stop this process, the Paris-based bureaucracy is threatening low-tax nations with financial protectionism unless they change their tax and privacy laws so that high-tax nations can more easily double-tax income that is saved and invested - even when that income is earned in other nations.

      This is a completely misguided initiative. Tax competition is a liberalizing force in the world economy, something that should be celebrated rather than persecuted. It forces governments to be more fiscally responsible lest they drive economic activity to lower-tax environments. Other reasons for our opposition include:

• The OECD seeks to create a tax cartel - Consumers benefit and the economy is more efficient when gas stations, banks, pet stores, and car companies compete. The same thing is true for government. Competition promotes efficiency and encourages lawmakers to rationalize public finance.
   
• The OECD is threatening global commerce - Protectionism is a bad idea, and it is a really bad idea when the goal is to interfere with international capital flows. The OECD effort is akin to a high-tax state like California trying to block investment dollars from flowing to a low-tax state like Nevada.
   
• The OECD proposal will boost the underground economy - Instead of propping up uncompetitive tax systems, criminalizing tax competition will simply drive taxpayers into the informal economy. A low tax burden, by contrast, will reduce incentives to hide, shelter, and under-report income.
   
• The OECD is defending bad tax policy - In order to minimize tax-induced distortions, the tax code should neither subsidize nor penalize different activities. Yet the OECD initiative is driven by a desire to help high-tax nations double-tax income that is saved and invested.
   
• The OECD will hurt growth in less-developed nations - Penalizing countries for adopting market-friendly tax systems will hinder economic reform and reduce growth rates in the developing world. This may even cause more crime since opportunities for honest employment will shrink.

Hoover Institute

Jim Buchanan

Nobel Laureate

George Mason University

William R. Allen

University of California, Los Angeles

Charles Calomiris

Columbia University

Kenneth W. Clarkson

University of Miami

Veronique de Rugy

George Mason University

Nicholas Economides

NYU & Stanford

John C. Goodman

National Center of Policy Analysis

Randall G. Holcombe

Florida State University

Michael C. Jensen

Harvard Business School

Deepak Lal

UCLA

Bennett T. McCallum

Carnegie Mellon University

Deirdre McCloskey

University of Illinois at Chicago

David I. Meiselman

Virginia Tech

Allan Meltzer

Carnegie Mellon University

James C. Miller III

Citizens for a Sound Economy

Daniel Mitchell

Heritage Foundation

Bill Niskanen

Cato Institute

Richard Schmalensee

MIT

Brian S. Wesbury

Griffin, Kubik, Stephens & Thompson, Inc.

James C.W. Ahiakpor

California State University (Hayward)

Ryan C. Amacher

University of Texas at Arlington

Robert V. Andelson

Great Barrington, MA

Mohamed Ariff

Malaysian Institute of Economic Research (MIER)

Scott Arnold

University of Alabama at Birmingham

Andrew Atkeson

UCLA

Charles W. Baird

California State University

Doug Bandow

Cato Institute

William Barnett II

Loyola University New Orleans

Naomi Lopez Bauman

San Francisco, CA

William W. Beach

The Heritage Foundation

James T. Bennett

George Mason University

John Berthoud

Adjunct Lecturer, George Washington University

George Bittlingmayer

University of Kansas

Donald R. Booth

Chapman University

Nancy Bord

Former Visiting Scholar The Hoover Institution

Mike Bordo

Rutgers University

Samuel Bostaph

University of Dallas

Michael W. Brandl

The University of Texas at Austin

Wayne T. Brough

Citizens for a Sound Economy

Andrzej Brzeski

University of California, Davis

Steven Buccola

Oregon State University

M. Northrup Buechner

St. John's University

David Burton

The Prosperity Institute

W. V. Bussmann

DaimlerChrysler

F. Patricia Callahan

American Association of Small Property Owners

Noel D. Campbell

North Georgia College & State University

Bhagwan Chowdhry

The Anderson School at UCLA

Paul A. Cleveland

Birmingham-Southern College

John P. Cochran

Metropolitan State College of Denver

Boyd Collier

Tarleton State University

Paul Combs

Appalachian Regional Development Institute

Roy E. Cordato

The John Locke Foundation

Wendell Cox

Wendell Cox Consultancy

Christine G. Crafton

Washington, DC

Carl J. Dahlman

RAND Corp.

Ronnie H. Davis

Printing Industries of America

Gregory J. Delemeester

Marietta College

Arthur De Vany

University of California

Arthur M. Diamond, Jr.

University of Nebraska at Omaha

Thomas J. DiLorenzo

Loyola College in Maryland

Jeffrey H. Dorfman

University of Georgia

Gerald P. Dwyer, Jr.

Atlanta, GA

Frank Edwards

Columbia University

Robert B. Ekelund, Jr.

Auburn University

Kenneth G. Elzinga

University of Virginia

Paul Evans

Ohio State University

Frank Falero

Springville, CA

Allen M. Featherstone

Kansas State University

Edgar R. Fiedler

Economist

Arthur A Fleisher III

Metropolitan State College of Denver

Fred Foldvary

Santa Clara University

William F Ford

Middle Tenn. State Univ.

Andrew W. Foshee

McNeese State University

Steven B. Frates

Claremont McKenna College

Robert Fry

Washington, WV

Georgy Ganev

Centre for Liberal Strategies (Bulgaria)

S D Garthoff

The University of Akron

Gerald T. Garvey

Claremont Graduate University

James F. Gatti

University of Vermont

Rick Geddes

Fordham University

Robert Genetski

GenetskiFinancialAdvisors.com

Paul Georgia

Competitive Enterprise Institute

Herbert Giersch

Kiel (Germany) Institute of World Economics

Micha Gisser

The University of New Mexico

Richard L. Gordon

Pennsylvania State University

Tim Groseclose,

Stanford University

Gerald Gunderson

Hartford, CT

David D. Haddock

Northwestern University

Dennis Halcoussis

California State University, Northridge

Gordon Hanka

Penn State University

John R. Hanson II

Texas A and M University

Robert Harding

California State University, Northridge

James E. Hartley

Mount Holyoke College

Frank Hefner

College of Charleston

Robert Herren

North Dakota State University

Robert Higgs

The Independent Institute

Robert J. Hodrick

Columbia University

Kevin D. Hoover

University of California

Larry Hunter

Empower America

John D. Jackson

Auburn University

Stephen Jackstadt

University of Alaska Anchorage

Raymond J. Keating

Small Business Survival Committee

Roger L Kerr

New Zealand Business Roundtable

E. Han Kim

University of Michigan Business School

Daniel B. Klein

Santa Clara University

Thomas J. Kniesner

Syracuse University

Robert Krol

California State University, Northridge

David N. Laband

Auburn University

Michael Darren LaFaive

Mackinac Center for Public Policy

Robert A. Lawson

Capital University

John Leeth

Bentley College

Pierre Lemieux

Université du Québec à Hull

Mickey D. Levy

Banc of America Securities

Dean R. Lillard

Cornell University

Jody W. Lipford

Presbyterian College

Dennis E. Logue

Tuck School, Dartmouth College

Roderick T. Long

Auburn University

Edward J. Lopez

University of North Texas

James R. Lothian

Fordham University

Alfred Lubell

SUNY Oneonta

Tibor R. Machan

Chapman University

Doug MacKenzie

Kean University

Burton Malkiel

Princeton University

Yuri N. Maltsev

Carthage College

Michael L. Marlow

California Polytechnic State University

Jim Martin

60 Plus Association

John Mathys

De Paul University

John G. Matsusaka

University of Chicago

Fred S. McChesney

Northwestern. University

John McClaughry

Ethan Allen institute

Gerrit Meijer

University Maastricht

Michael Melvin

Arizona State University

Lloyd J. Mercer

University of California, Santa Barbara

John Merrifield

University of Texas - San Antonio

Roger E. Michener

Michener Law Firm, LLC

Tracy Miller

Grove City College

Jeffrey Milyo

University of Chicago

Carlisle E. Moody

College of William and Mary

Michael A. Morrisey

University of Alabama at Birmingham

Jennifer Roback Morse

Stanford University

George R. Neumann

University of Iowa

William Orzechowski

Orzechowski and Walker,

Gary J. Palmer

Alabama Policy Institute

Harry Papasotiriou

Society for Social and Economic Studies (Greece)

Duane Parde

American Legislative Exchange Council

E. C. Pasour, Jr.

N.C. State University

Ellen Frankel Paul

Bowling Green State University

William S. Peirce

Case Western Reserve University

Mark J. Perry

University of Michigan-Flint

Tomas Philipson

Bruce D. Phillips

National Federation of Independent Business Education Foundation

Charles R. Plott

California Institute of Technology

Barry W. Poulson

University of Colorado

Edward C. Prescott

University of Minnesota

Miroslav Prokopijevic

Institute for European Studies, Belgrade

Jan S. Prybyla

The Pennsylvania State University

Richard Rahn

Discovery Institute

Carmen M. Reinhart

University of Maryland

Morgan Reynolds

Texas A&M University

Aldona Robbins

Fiscal Associates

Gary Robbins

Fiscal Associates

Colin Robinson

University of Surrey, Guildford, UK

Richard Roll

University of California, Los Angeles

David C. Rose

University of Missouri - St. Louis

Robert J. Rossana

Wayne State University

Gabriel Roth

Chevy Chase, MD

Ronald D. Rotunda

The University of Illinois College of Law

Charles K. Rowley

George Mason University

Paul H. Rubin

Emory University

Roy Ruffin

University of Houston

Richard Saba

Auburn University

Joseph T. Salerno

Pace University

Michael Saliba,

Loyola University New Orleans

Tom Schatz

Citizens Against Government Waste

Aaron Schavey

Heritage Foundation

Gerald W. Scully

University of Texas at Dallas

Larry J. Sechrest

Sul Ross State University

Howard Segermark

President, Segermark Associates

Alan C. Shapiro

University of Southern California

Stephen Shmanske

California State University, Hayward

William F. Shughart II

The University of Mississippi

S. Fred Singer

The Science & Environmental Policy Project

Fred L. Smith, Jr.

Competitive Enterprise Institute

Russell S. Sobel

West Virginia University

Stan Spurlock

Mississippi State University

J. E. R. Staddon

Duke University

E. Frank Stephenson

Berry College

Alan C. Stockman

University of Rochester

Courtenay C. Stone

Ball State University

Shirley Svorny

California State University, Northridge

Michael P. Sweeney

Hillsdale College

Alexander Tabarrok

The Independent Institute

Thomas L. Tacker

Emry-Riddle Aeronautical University

David J. Theroux

The Independent Institute

Clifford F. Thies

Shenandoah University

Henry Thompson

Auburn University

Richard H. Timberlake Jr.

University of Georgia

Richard Vedder

Ohio University

George J. Viksnins

Georgetown University

H. D. Vinod

Fordham University

Richard E. Wagner

George Mason University

John T. Wenders

University of Idaho

Christopher Westley

Jacksonville State University

Robert Whaples

Wake Forest University

James B Whisker

West Virginia University

Bryce Wilkinson

Capital Economics Limited (New Zealand)

Gary Wolfram

Hillsdale College

Thomas L. Wyrick

Southwest Missouri State University

Kate Zhou

University of Hawaii

Benjamin Zycher

Pacific Research Institute

Meir Zylberberg

Fundacion Libre  (Argentina)