The Trend Toward Totalitarian Government

by | Sep 26, 2002

A truly civilized, wealth-respecting world would observe capital flight and brain drains, recoil in horror and stop penalizing success. It would cut tax rates and regulation and cease calling wealth-makers as criminals who deserve a noose — or deportation. But this is not the response we’re seeing today. Instead there are calls for ever-greater tax […]

A truly civilized, wealth-respecting world would observe capital flight and brain drains, recoil in horror and stop penalizing success. It would cut tax rates and regulation and cease calling wealth-makers as criminals who deserve a noose — or deportation.

But this is not the response we’re seeing today. Instead there are calls for ever-greater tax burdens, ever-more regulation and ever-less financial privacy. Indeed, as we noted at the outset of our report, there also have been calls for an “International Tax Organization” (ITO) that would impose taxes globally. The ITO would be modeled on the World Trade Organization (WTO) which, in its brief history, already has run roughshod over the sovereignty of nations.

ITO taxes — to be collected by the U.N. from taxpayers in industrialized (and tax haven) nations — would be redistributed to poor nations in the form of foreign “aid.” In short, the burden of today’s national welfare states would be heightened by adding an international welfare state. Instead of scaling back individual welfare states — which are the ultimate cause of high tax burdens and indirectly, of capital flight to tax havens — this proposal would impose the burden of welfare statism uniformly on the entire planet.

The push for a “world tax” to “fight global poverty” was first proposed by the head of the U.N. in 1996. In June 2001 the U.N. stepped up its campaign, specifically in a report written by its “High Level Panel on Financing for Development.” That report spells out the role of an International Tax Organization (ITO).65 The U.N. not only endorses the OECD’s efforts to eliminate tax havens, it also proposes three new taxes:

1) a tax on foreign exchange transactions (the “Tobin Tax”),

2) a tax on carbon dioxide emissions, and

3) a tax on the emigration of the wealthy and successful (the “brain drain tax”)

On this third tax, the U.N. argues that:

Sadly, increasing polarization between the haves and the have-nots has become a feature of our world. Reversing this shameful trend is the pre-eminent moral and humanitarian challenge of our age. . . . It is time for governments to start working together to develop forms of international cooperation to optimize collectively the benefits of the movement of labor across national borders. . . . The international community should consider the potential benefits of . . . the taxation of capital flight and . . . the taxation of emigrant income.

Those “benefits,” says the U.N., include obtaining tax revenues on those who emigrate from punitive regimes to less punitive or attractive “tax haven” regimes. The U.N. also recommends a world-wide effort to confiscate and redistribute intellectual property. Its report argues that there should be:

A reconsideration of trade-related intellectual property protection, with a view, among other things, to seeking ways to achieve low-cost availability of inventions without affecting the incentive to innovate.

“Low–cost availability” means theft. Instead of removing or reducing the oppressive regulation and taxation that makes capital or talented individuals flee, the U.N. argues for confiscating their income, their wealth and any intellectual property they may possess, on their way out the door. Its basic premise is that successful individuals are effectively human chattel, to be exploited by governments — not only while trying to live in oppressive regimes, but while trying to flee them.

For world “leaders” to add insult to injury in this way is the height (or more accurately, the depth) of barbarism. It means the world is being led by entities who are oblivious to the pre-conditions of wealth-creation and freedom. The U.N.’s proposed tax on the “brain drain” is actually a revival of a proposal first outlined in 1976, when an entire book was devoted to the topic: Taxing the Brain Drain.66 Was that a “non-mainstream” book? Not at all. Its editors taught at MIT and the London School of Economics.

Those who think it’s far-fetched that an ITO could ever be formed — or that it could ever impose such taxes — should recognize that major, respected institutions back the idea, that those institutions have the U.S. government as a leading member and sponsor and that the same skepticism was expressed about the formation (and powers) of the World Trade Organization. Even run-of-the-mill financial publications today are pushing hard for such global taxing powers. According to The Economist, a “solution” to the problem of “insufficient tax revenues” is needed that goes beyond shutdowns of tax havens:

Governments may be able to pool their sovereignty by joining international bodies . . . [But] the OECD lacks sufficient clout, especially over non-members. . . . Some policymakers think that a World Tax Organization should take its place alongside institutions such as the U.N., NATO, the IMF, the World Bank and the World Trade Organization.67

The ITO proposal was introduced last March at the foreign aid summit in Mexico. Its leading advocates were Britain, Germany and “two Nordic countries.” The U.S. officially opposed it, but not in principle: it merely opposed adopting it “at this time.” The head of the U.S. International Agency, Patrick Cronin said “some people are saying,

Dr. Salsman is president of InterMarket Forecasting, Inc., an assistant professor of political economy at Duke University and a senior fellow at the American Institute for Economic Research. Previously he was an economist at Wainwright Economics, Inc. and a banker at the Bank of New York and Citibank. Dr. Salsman has authored three books: Breaking the Banks: Central Banking Problems and Free Banking Solutions (AIER, 1990), Gold and Liberty (AIER, 1995), and The Political Economy of Public Debt: Three Centuries of Theory and Evidence (Edward Elgar Publishing, 2017). In 2021 his fourth book – Where Have all the Capitalist Gone? – will be published by the American Institute for Economic Research. He is also author of a dozen chapters and scores of articles. His work has appeared in the Georgetown Journal of Law and Public Policy, Reason Papers, the Wall Street Journal, the New York Times, Forbes, the Economist, the Financial Post, the Intellectual Activist, and The Objective Standard. Dr. Salsman earned his B.A. in economics from Bowdoin College (1981), his M.A. in economics from New York University (1988), and his Ph.D. in political economy from Duke University (2012). His personal website is

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