Bdos: Mi say mi cyaan believe it! Wha' gwaan?

IN our May 14 Editorial titled “Alienation is suicidal – US vote vital for Barbados”, we suggested a victory for Democrats in the November elections would be much less to Barbados’s economic advantage than if the Republicans retained power.

Writing in another section of the Press on May 20, a retired British Army captain, now a naturalised citizen of Barbados, took strong objection. His response claimed, inter alia, that we “wobbled off the straight and narrow... expressing extraordinary views”.

For the benefit of readers, we offer the following edited version of an opinion on whether a win by presidential candidate, Senator John Kerry, would be a problem for Caribbean offshore financial services centres.

The opinion is that of Chief Economist of the Heritage Foundation’s Chief Economist, Dr. Dan Mitchell. [The United States-based Heritage Foundation is one of the world’s most influential public policy research institutes]. There is no question, the economist says, that Senator Kerry wants to increase taxes on Americans who do business outside United States borders.

Since many of the Caribbean financial domiciles are effective platforms for US companies and individuals, there would be damage if Kerry were elected president.

Many US multinationals rely very heavily on their ability to use financial centres in the Caribbean as platforms to conduct their international business. Kerry’s plan would undermine the competitiveness of these companies and discourage them from using Caribbean financial centres.

What Senator Kerry isn’t saying is that, unlike President Bush, he would embrace the anti-tax competition efforts of international bureaucracies like the Organisation for Economic Co-operation and Development [OECD] and the European Union [EU].

There is some hope that even if the Democrats pick up seats, Congress would be reluctant to deliberately sabotage the ability of American companies to compete in the global economy. So although there is cause for worry, it is not only about the Kerry proposal to increase taxes on US multinationals.

Of greater concern are the implications of a Kerry victory for the battle between those who favour tax competition and those who favour tax harmonisation. Kerry would probably allow France, Germany and other high-tax European welfare states to ratchet up and make OECD and EU anti-tax competition efforts more aggressive. This would be a direct threat to low-tax jurisdictions in the Caribbean like Barbados, The Bahamas, Bermuda and the Cayman Islands.

This is an area where the executive branch of the US government, i.e., the president and, more specifically, the Treasury Department has a bigger effect on what happens than Congress. The OECD and the EU are proposing things and considering things that signal the direction of the American government.

Just as the Clinton administration was very sympathetic to discriminatory policies proposed by the OECD, a Kerry administration would have the same attitude.

On the other hand, the Bush administration, while far from perfect, has been much more sympathetic to the notion of tax competition and has been much less willing to launch a sort of jihad [holy war] of discriminatory sanctions against financial centres in the Caribbean.

Elizabeth! This is the big one, baby!

First, I must confess to being astonished that a Caribbean newspaper is taking fiscal advice from a conservative think-tank. However, more than that, I'm flabbergasted that a Caribbean editorial page gets what many U.S. editorial pages don't: Democrats are bad for economies.

Don't waste your time blathering at me about the Clinton boom. Had it not been for Newt Gingrich's Republican revolution in 1994, which neutered the economy-killing effects of the greatest ever tax increase in history -- Clinton's -- there would have been no "decade of greed" in the 1990s. Oops, I forgot! It's only called the "decade of greed" when a Republican president devises policies to foster an economic boom, as Ronald Reagan did in the 1980s, and as GWB is doing in the 2000s.

Imagine that, the real truth of the Clinton administration coming from outside the U.S.! Pro-tax and pro-welfare, and anti-economic growth. Thank God for Republicans.