Like a bad sequel to a rotten horror movie, the debate over global taxation once again is rearing its ugly head courtesy of the United Nations. And, despite lacking the requisite hockey mask and chain saw, the seemingly countless proposals for the imposition of global taxes are truly terrifying.
In July, Inter Presse news service reported that a top U.N. official was preparing a new study that will outline numerous global tax proposals to be considered by the General Assembly at its September meeting. The proposals will likely include everything from global taxes on e-mails and Internet use to a global gas tax and levies on airline travel. If adopted, American taxpayers could wind up paying hundreds of billions of dollars each year to the United Nations.
U.N. Secretary-General Kofi Annan is among those leading the charge, having stated that he "strongly supports finding new sources of funding" for the U.N. through global taxes, according to Inter Presse. In fact, Annan made very clear his support for the imposition of global taxes in a 2001 Technical Note that he authored for a U.N. conference. "The need to finance the provision of global public goods in an increasingly globalized world also adds new urgency to the need for innovative new sources of financing," Annan wrote. The Note goes on to describe and evaluate the merits of several global tax proposals.
Global tax proposals are not new. Various plans have been flitting around in academic circles and liberal and socialist think-tanks for decades. And while the United States and other developed nations have staved off such proposals in the past, third world nations have increasingly dominated the U.N. General Assembly by sheer numbers since 1970. As a result, they have begun to see promise in their quest to take and keep for themselves the wealth of citizens from nations like the United States specifically using the term "redistribution." Recent U.N. actions have also provided a new excuse and set the stage for the third world to not only renew its pursuit of global taxes but also hold out hope for eventual success.
In 2000, the U.N. General Assembly approved a "Millennium Declaration" that committed the world body and its member nations to a sweeping list of objectives, particularly in the area of assisting "developing" nations. Among them were five specific goals, to be achieved by 2015, aimed at reducing poverty, improving childrens health and fighting AIDS around the world.
Arguing that developed nations like the United States have not done enough to achieve these goals, despite the fact that we provide the bulk of the U.N.s money, U.N. leaders have recently begun using the Millennium Goals as an excuse to explore global taxation. As Inter Presse reported, U.N. Secretary General Kofi "Annan has warned that unless current development assistance is doubled to $100 billion annually, the worlds 132 developing nations will fail to meet their Millennium Development Goals."
Using the Millennium Goals as the excuse, the United Nations is set to once again begin considering specific methods to extract wealth from citizens of the United States and other first world nations for "redistribution" to the citizens in the less developed, poorer third world. Among the schemes being contemplated are:
E-mail tax. Global taxation zealots smell a powerful opportunity in the Internet. Under their plan, e-mail users would pay a tax of about $.01 for each megabyte of data that they send, generating up to $150 billion per year. While advocates admit that such a tax would discourage the use of e-mail, interfere with the least-regulated communications forum and economic marketplace in the world and be "complex and technically difficult" to administer, they are unable to resist raiding what they see as an untapped pot of gold. The tax, they say, would "raise funds that would be spent to narrow the digital divide between rich and poor" nations.
A tax on fossil fuels like gasoline, coal, oil and natural gas. This plan, usually called a Carbon Tax, would drive up the price of gas for cars and trucks, home heating fuels, plastics, and countless other products. Proponents argue that such a tax would combat global warming by discouraging the use of fossil fuels while the revenue from such a tax could be redistributed to poorer nations. One U.N. paper suggested that such a tax would yield $125 billion per year with U.S. taxpayers stuck for more than $25 billion of that tab. But even supporters acknowledge that the modest tax that they would initially propose would not reduce greenhouse gasses or even slow the use of fossil fuels. In order to achieve that policy goal, the tax rate would have to be very high enough to generate $750 billion per year, of which U.S. taxpayers would pay more $150 billion.
Currency transaction tax (CTT). Each year, nearly $300 trillion is exchanged on open markets around the world. Dollars are sold for British Pounds. Japanese Yen are converted to Euros. Major international banks, many of them based in the United States, Great Britain and the Far East, conduct and manage these transactions. Advocates of the CTT, which was originally devised by a French economist, want to impose a tax of around .1% on each transaction. According to the United Nations, such a tax would generate up to $264 billion per year. Proponents also want the tax plan to mandate that the proceeds go to a global fund which "would redistribute tax revenue away from financial center countries in favor of low-income nations." In order to make the tax more palatable at first, a U.N. paper suggests that the tax might start at "an extremely low rate" and be increased incrementally over time. The CTT would likely increase the cost of nearly every good shipped or traded internationally including just about every consumer product in todays economy: cars, toys, electronics, food and more. It would also hamper the free exchange of currency on world markets and possibly spawn a "black market" for money trading.
International air transport tax. Under this scheme, a new tax would be levied on all international cargo and passenger flights to be paid by airlines. Supporters say "air transport of passengers and cargo [is] a key source of environmental pollution due to emissions and noise." This tax, they believe, would force the airlines (ultimately, their passengers and shippers) to pay for polluting the skies while providing money to the United Nations. According to one estimate, an international transport tax would generate $2.2 billion per year. Though supporters concede that the tax would have a harmful effect on tourism and the world economy at-large, the benefits to the environment and the cash it would generate, outweigh those negative consequences, they say. They dont address the proposals inherent contradiction. Namely, that by increasing the cost of international air transport, whether of goods or passengers, this tax proposal discourages the kind of globalization that the tax is meant to spur.
Aviation Fuel Tax. Very similar to the air transport tax, this plan would place a levy on airline fuel costs and would yield around $12.5 billion per year. In addition to having the same harmful effects as the air transport tax, this scheme would also jeopardize the already vulnerable airline industry and add at least 5 percent to the cost of airline tickets. Proponents, however, see this proposal as an important step to get the global taxation movement started. One supporting organization writes, the tax "might be a low-profile precedent for later, more ambitious tax plans."
Those are the most frequently discussed of a bevy of global tax proposals that have been put before the international community. Others include a tax on the international conventional arms trade, fines for ocean dumping, a tax on commercial fishing, a tax on Earth-orbiting satellites, a tax on the use of the electronic spectrum (for television, radio, cell phones, etc.), a tax on the profits of international businesses and even a tax on international advertising.
While the names and proposals are different, the vital undercurrent remains the same. The drive toward world taxation focuses on three key purposes, all of them objectionable: (1) making policy through taxation (for example, levying high taxes on gasoline in order to reduce use of fossil fuels); (2) generating revenue for the United Nations; and (3) redistributing income from richer nations like the United States to the poorer ones in the third world.
Countless books and scholarly articles have been written on the folly of affecting policy through taxation. Suffice it to say that little good ever comes from a tax plan constructed to affect behavior. All too frequently, such taxes have devastating unintended consequences, wreak havoc on free markets and cause more harm than good.
The notion of generating even more revenue for the already bloated United Nations is similarly absurd. In recent years, the world body has been the birthplace of nearly continuous stories of corruption, most notably the recent Oil for Food scandal. So its hard to understand why anyone would advocate funneling even more billions through an organization where the money rarely gets to where its intended.
Then, of course, theres the concept of redistribution. Future commentary will focus on this subject even more sharply. But for now, consider this: one of the most important strengths of the United States, and one of the reasons it has been the destination for immigrants worldwide for more than two centuries, is the assurance that, in our system, everyone is free to pursue success, and if they achieve it, their rewards will not be seized and handed over to someone else. Redistribution would turn this fundamental strength and foundational value on its head. While Americans work hard and strive for success, failing and corrupt nations would reap the benefits.
Needless to say, the failing nations, led by banana republic regimes, would like nothing better. A global tax would be the ultimate handout and security assurance for crippled governments, failed states, and totalitarian regimes.
As the United Nations and its chorus of developing countries begin to make their case in earnest over the coming months, Americans should watch their wallets. The global taxation zealots are coming.
And, just as in previous renditions of this fiscal horror flick, Americans need to be ready to make their voices heard. The world community needs to understand that the United States and its citizens view any proposal for global taxation as an unacceptable attack on our sovereignty. Hopefully, this time, Americans will take the chain saw to the U.N.'s global tax agenda once and for all.August 12, 2004