21 Nov 2013 11:00am

JFK’s international tax legacy

50 years on: plus ça change, plus c’est la même chose

50 years ago, on 22 November 1963, President Kennedy was assassinated. His life, the manner of his death and his presidency have remained of consuming interest ever since and this week will be marked by many tributes and reassessments of his legacy.

I shall look at a statement that he made about tax and the role he played in setting up OECD which recently celebrated its own 50 year anniversary: it was formally established in September 1961.

International development

If you visit Chateau la Muette in Paris which has been the headquarters of OECD since its foundation in 1961, you will find a black and white photo of President Kennedy sitting in the Oval Room in the White House meeting with the secretary general elect of OECD. The photo was taken in February 1961 but it was put up after President Kennedy’s death and below the photo is a quote from the first editor of the OECD magazine:

We are entering a new era in which the day-to-day economic affairs of the western nations are becoming more and more closely intertwined

President Kennedy

“President Kennedy had so much to do with the creation of OECD. Nobody else did so much.”

When President Kennedy sent off the first US delegation to the OECD in 1961 he said:

“We are entering a new era in which the day-to-day economic affairs of the western nations are becoming more and more closely intertwined. We face problems and opportunities to which we must respond in full awareness of the common stake in sound decisions. To overcome recession and unemployment, to achieve and maintain high rates of growth, to encourage world economic development--these are no longer merely independent national goals to be pursued by each of our member countries in isolation from the others. They are also common goals which call for sustained common action through economic policies which reflect our common interests.”


Tax has been one of the core activities of OECD ever since it was first established. It is now tasked with recalibrating the international tax system to re-establish a fairer link between the profits that multinational businesses make and the tax they pay to individual countries. This work which is to be completed by the end of 2015 has strong political backing from both the G8 and the G20 countries.

If those working on the current OECD project turn back to the words of President Kennedy they will find that in an address to the US Congress in April 1963 President Kennedy said:

“Recently more and more enterprises organized abroad by American firms have arranged their corporate structures-aided by artificial arrangements between parent and subsidiary regarding intercompany pricing, the transfer of patent licensing rights, the shifting of management fees, and similar practices which maximize the accumulation of profits in the tax haven-so as to exploit the multiplicity of foreign tax systems and international agreements in order to reduce sharply or eliminate completely their tax liabilities both at home and abroad. To the extent that these tax havens and other tax deferral privileges result in U.S. firms investing or locating abroad largely for tax reasons, the efficient allocation of international resources is upset, the initial drain on our already adverse balance of payments is never fully compensated, and profits are retained and reinvested abroad which would otherwise be invested in the United States.”

President Kennedy did put in measures in the 1960s to address these concerns including the first Controlled Foreign Company (CFC) regime but these have been watered down over time and now it is the OECD which is tasked to correct what most people recognise is an international tax regime in need of repair.

The Base Erosion Profit Shifting (BEPS) programme of OECD is scheduled to end in December 2015 and while there will be some new and revised measures in place by that deadline this is likely to be an on-going programme of work for many more years after that.

Ian Young Ian Young, international tax manager, ICAEW Tax Faculty


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