President Donald Trump has asked Secretary of State Marco Rubio to review all international organizations to determine whether they are “contrary to the interests of the United States.” When Rubio delivers his report later this year, one of his recommendations — perhaps even at the top of the list — should be stopping the flow of American tax dollars to the Organization for Economic Cooperation and Development.
The Paris-based OECD was established after World War II and initially focused on collecting statistics and producing benign reports. It was not an overly productive use of taxpayer funds, but at least it was not doing damage.
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Unfortunately, that is no longer the case. In recent decades, Europe’s uncompetitive, high-tax welfare states have hijacked the OECD and turned it into an organization pushing policies that are contrary to economic freedom and very much hostile to American interests.
The most notorious example is the bureaucracy’s campaign for higher taxes, which began about 30 years ago. European governments were upset that they faced competitive pressure after President Ronald Reagan and Prime Minister Margaret Thatcher dramatically lowered tax rates. Those welfare states were also agitated that globalization made it easier for investors and businesses to escape confiscatory tax rates by shifting their money to low-tax jurisdictions.
Bureaucrats even produced a 1998 report titled “Harmful Tax Competition,” which explicitly claimed it was unfair for some nations to have low tax burdens. Parts of the report read like a Bernie Sanders campaign speech, trumpeting “progressive” tax rates and defending bloated European welfare states. It even created a blacklist in 2000 of jurisdictions that attracted lots of investment because of their good tax policies, though the bureaucrats were smart enough to omit the U.S.
The following year, however, former President George W. Bush became president, and free market groups such as the Center for Freedom and Prosperity worked with members of Congress and other free market groups to temporarily kill this early attempt at orchestrating a tax cartel.
Unfortunately, former President Barack Obama’s victory in 2008 meant the bureaucrats in Paris had an ally in the White House. Ultimately, they could bully low-tax jurisdictions into acting as deputy tax collectors for a high-tax nation. The next major assault came in the form of its Base Erosion and Profits Shifting project, a proposal for a corporate tax cartel to block an imagined “race to the bottom” on corporate tax collections, even though the OECD’s own data showed that was not happening.
Even though American companies were the main target, the Biden administration supported BEPS, celebrating its proposal to harmonize business tax rates and insulate high-tax nations from competition. Trump immediately and correctly clarified upon taking office that Biden’s capitulation lacked any force of law.
When not scheming to create a new tax order, the OECD has consistently pushed anti-growth policies on countries through its Economic Surveys, which are reports on specific nations that frequently call for it to enact “progressive” tax schemes by raising taxes on income, capital gains, death, and businesses, and which push bigger welfare states in response to “inequality.” It even uses creative euphemisms such as “domestic resource mobilization” and “capacity building” to make its pro-tax increase proposals seem more palatable.
When opining about the U.S., the OECD has pushed hikes for corporations, dividends, capital gains, payroll taxes, and new energy taxes. It never identified any government department to eliminate or reformed unsustainable entitlement systems.
The U.S. is the single-largest contributor to the OECD’s budget, providing over 18% of its general fund. Total expenses are about $74 million per year when combined with contributions for special projects. However, that money doesn’t merely leave the U.S. economy; it is used to advocate far-left economic policies at home and abroad.
The federal government is riddled with waste, but it’s probably safe to say that handouts for the OECD on a per-dollar basis are the most destructive outlays in the entire federal budget. Taxpayers are subsidizing a leftist bureaucracy that is pushing to saddle them with even bigger government and even higher taxes.
The bureaucrats at the OECD enjoy tax-free salaries at the expense of taxpayers. They are also very good at wining and dining American politicians, which is how they have managed to avoid accountability for so long. There’s never been a more opportune time to derail the OECD’s gravy train by turning off the U.S. taxpayer spigot. If nothing else, the White House should defund the OECD as payback since senior officials of that bureaucracy likened Trump to Hitler and also accused him of being racist.
Cesar Conda, former chief of staff to former Sen. Marco Rubio (R-FL), is a member of the Economic Advisory Council for the Committee to Unleash Prosperity. Daniel Mitchell is president of the Center for Freedom and Prosperity.