Law Commons^™

Tax Treaty Treatment Of Royalty Payments From Low-Income Countries: A Comparison Of Canada And Australia’S Policies, Kim Brooks

Articles, Book Chapters, & Popular Press

The proposal made in this paper is a modest one: that high-income countries should further the cause of reducing global inequality by ensuring that in their tax treaties with low-income countries they do not usurp needed revenues by reducing low-income countries' ability to collect tax on income with a source in the low-income country. This argument is made in the specific context of the taxation of royalty payments, which present one of the most extreme examples of high-income countries unfairly confiscating revenues that appropriately belong to their low-income treaty partners. The Organisation for Economic Co-operation and Development (OECD) model tax …

The Aches And Pains Of Transition To A Consumption Tax: Can We Get There From Here?, Daniel S. Goldberg

Faculty Scholarship

This article discusses probably the most significant obstacle to the adoption of a consumption tax: the negative effects on existing wealth that the transition from the income tax to most forms of a consumption tax would have. The Congressional Budget Office in its 1997 study posed the question, “How to Get There from Here.” The difficulty with transition and the changes in the tax law since the CBO study, however, prompt the more basic question: “Can we get there from here?” This article deals with this question by examining the effects of transition on existing wealth under a variety of …

Corporate Taxation And International Competition, James R. Hines Jr.

Book Chapters

Many countries tax corporate income heavily despite the incentives that they face to reduce tax rates in order to attract greater investment, particularly investment from foreign sources. The volume of world foreign direct investment (FDI) has grown enormously since 1980, thereby increasing a country's ability to attract significant levels of new investment by reducing corporate taxation. The evidence indicates, however, that corporate tax collections are remarkably persistent relative to gross domestic product ( GDP), government revenues, or other indicators of underlying economic activity or government need. If this were not true- if corporate income taxation were rapidly disappearing around the …

Commentary, Reuven S. Avi-Yonah

Book Chapters

David Rosenbloom has delivered an important lecture on an important topic: whether exploiting differences between the tax system of two different jurisdictions to minimize the taxes paid to either or both ("international tax arbitrage") is a problem, and if so, whether anything can be done about it in a world without a "world tax organization." As Rosenbloom states, international tax arbitrage is "the planning focus of the future," and recently has been the focus of considerable discussion and debate (for example, upon the promulgation and subsequent withdrawal under fire of Notice 98-11). Rosenbloom's lecture is one of the first attempts …

Taxing Consumption And Other Sins, James R. Hines Jr.

Articles

Federal and state governments in the United States use income and payroll taxes as their primary tools to collect revenue. In the rest of the world, governments also use income and payroll taxes, but rely much more heavily than does the United States on taxing consumption. Consumption taxes take many forms, including general sales taxes, value-added taxes, and excise taxes on the consumption of specific items including gasoline, alcohol, tobacco products, firearms, air travel, telephone communication, and others. The U.S. government does not use a value-added tax, making the United States unique among high-income countries and a rarity in the …

Dividend Policy Inside The Multinational Firm, Mihir A. Desai, C. Fritz Foley, James R. Hines Jr.

Articles

This paper examines the determinants of profit repatriation policies for US multinational firms. Dividend repatriations are surprisingly persistent and resemble dividend payments to external shareholders. Tax considerations influence dividend repatriations, but not decisively, as differentially-taxed entities feature similar policies and some firms incur avoidable tax penalties. Parent companies requiring cash to fund domestic investments, or to pay dividends to common shareholders, draw on the resources of their foreign affiliates through repatriations. Incompletely controlled affiliates are more likely than others to make regular dividend payments and to trigger avoidable tax costs through repatriations. The results indicate that traditional corporate finance concerns …

Taxation In Developing Countries: Some Recent Support And Challenges To The Conventional View, Reuven S. Avi-Yonah, Yoram Margolioth

Articles

The general advice given by international institutions such as the International Monetary Fund (IMF) and the World Bank to developing countries over the past few decades has been to replace trade taxes with domestic consumption taxes, particularly value-added taxes (VAT), and to maintain relatively high corporate income tax rates. This article reviews recent literature that supports and challenges this conventional view.

Legislative Compromise And Tax Transition Policy, Michael Doran

Georgetown Law Faculty Publications and Other Works

The extensive literature on legal transitions has formed a general position in favor of establishing a governmental transition policy; the primary debate concerns whether the policy should be one of systematically mitigating or not mitigating transition losses. Arguments on both sides generally have assumed a sharp dichotomy between a substantive legal change and the transition treatment associated with the substantive change. Focusing on federal tax legislation, this article challenges that assumption and the normative conclusions that it supports.

Specifically, this article identifies compromise as an important component of the tax legislative process and argues that the ability to provide or …

The Cost Of Norms: Tax Effects Of Tacit Understandings, Alex Raskolnikov

Faculty Scholarship

Most human interactions take place in reliance on tacit understandings, customary practices, and other legally unenforceable agreements. A considerable literature studying these informal arrangements (commonly referred to as social norms) has a decidedly positive flavor, arguing that many, if not most, of these norms are welfare enhancing. This Article looks at the less-appreciated darker side of social norms. It combines an analysis of modern sophisticated tax planning techniques with existing empirical studies of commercial relationships to reveal a disturbing connection. By relying on tacit understandings rather than express contractual terms, many taxpayers shift some of their tax liabilities to those …