Law Commons^™

Interlinking Between Income Tax, Citizenship And Democracy? A Case Study Of Canada And China, Jinyan Li

Conference Papers

The interlink between taxation, citizenship and democracy appears to be obvious in Western democracies: citizens are voters, taxpayers and beneficiaries of public spending funded by tax revenues. The literature on the politics of taxation suggests that democratic institutions affect taxation at every stage of the policy-making process, the type of elections and governance model influence the level of redistribution and complexity of the tax system, democracies generally choose policies that are more favorable to the poor than non-democracies, the tax mix varies with the nature of the political regime, and more repressive governments rely less on personal income taxation. Political …

International Tax Reform: Who Gets A Seat At The Table?, Assaf Harpaz

Scholarly Works

The international tax framework relies on early-twentieth-century principles and favors the interests of the Global North, which created it. It bases taxing rights on a corporation’s physical presence and mostly allocates profits to the country of residence. Moreover, it has been slow to adapt to modern business practices. In the digital economy, companies shift profits with relative ease and often do not require a physical presence in the location of their consumers. International taxation needs reform, but leading proposals do not reflect meaningful input from the Global South and are unlikely to serve the needs of developing countries.

In 2021, …

World Tax Policy In The World Tax Polity? An Event History Analysis Of Oecd/G20 Beps Inclusive Framework Membership, Shu-Yi Oei

Faculty Scholarship

The last decade has seen the emergence of a new global tax order spearheaded by the OECD and G20 and characterized by increased multilateral consensus and cooperation. This new order appears to reflect the emergence of a new “world tax polity” with shared structures, practices, and norms, which have been shaped through the work of the OECD, G20, and other global actors. But what are the pathways by which this new world tax polity has emerged?

Using event history regression methods, this Article investigates this question by studying membership in the OECD/G20 BEPS Inclusive Framework, a multilateral tax agreement among …

The Tax Treatment Of Haircuts In Financial Reorganizations, Aurelio Gurrea-Martinez, Vincent Ooi

Research Collection Yong Pung How School Of Law

Over the past few years, Singapore has implemented various ambitious insolvency reforms aimed at making the country an international hub for debt restructuring. This article argues that while Singapore has put in place one of the most sophisticated restructuring frameworks in the world, some tax reforms might be useful to maximise the potential of this new restructuring framework. Namely, it will be pointed out that the tax treatment of debt forgiveness granted by creditors in corporate reorganisation (‘haircuts’) should be reviewed. Under the current legislation, these haircuts may be treated as taxable income. As a result, financially distressed debtors may …

Interest Deductibility And International Taxation In Canada After Beps Action 4, David G. Duff

All Faculty Publications

Among the ways in which multinational enterprises (MNEs) can shift profits from one jurisdiction to another in order to minimize taxes, one of the most simple and widely-employed involves the payment of interest to related parties and third parties. For these reasons, it is not surprising that the Organisation for Economic Cooperation and Development’s Action Plan on Base Erosion and Profit Shifting (BEPS) identified the deduction of interest and other financial payments as a significant source of BEPS concerns, and that BEPS Action 4 was charged with developing “recommendations regarding best practices in the design of rules to prevent base …

International Taxation In An Era Of Digital Disruption: Analyzing The Current Debate, Itai Grinberg

Georgetown Law Faculty Publications and Other Works

The “taxation of the digital economy” is currently at the top of the global international tax policymaking agenda. A core claim some European governments are advancing is that user data or user participation in the digital economy justifies a gross tax on digital receipts, new profit attribution criteria, or a special formulary apportionment factor in a future formulary regime targeted specifically at the “digital economy.” Just a couple years ago the OECD undertook an evaluation of whether the digital economy can (or should) be “ring-fenced” as part of the BEPS project, and concluded that it neither can be nor should …

U.S. Tax Reform: Considerations For Service Members [Notes], Kan Samuel

Faculty Scholarship

No abstract provided.

Symposium: The Future Of The New International Tax Regime, Rosanne Altshuler, Fadi Shaheen, Jeffrey Colon, Michael Graetz, Rebecca Kysar, Susan Morse, Daniel Shaviro, Richard Phillips, Daniel Rolfes, Daniel Rosenbloom, Stephen Shay, Steven Dean

Faculty Scholarship

The symposium was held at Fordham University School of Law on October 26, 2018. It has been edited to remove minor cadences of speech that appear awkward in writing and to provide sources and references to other explanatory materials in respect to certain statements made by the speakers.

International Taxation In An Era Of Digital Disruption: Analyzing The Current Debate, Itai Grinberg

Georgetown Law Faculty Publications and Other Works

The “taxation of the digital economy” is currently at the top of the global international tax policymaking agenda. A core claim some European governments are advancing is that user data or user participation in the digital economy justifies a gross tax on digital receipts, new profit attribution criteria, or a special formulary apportionment factor in a future formulary regime targeted specifically at the “digital economy.” Just a couple years ago the OECD undertook an evaluation of whether the digital economy can (or should) be “ring-fenced” as part of the BEPS project, and concluded that it neither can be nor should …

Before International Tax Reform, We Need To Understand Why Firms Invert, Michael S. Knoll

All Faculty Scholarship

A wave of corporate inversions by U.S. firms over the past two decades has generated substantial debate in academic, business, and policy circles.

The core of the debate hinges on a couple of key economic questions: Do U.S. tax laws disadvantage U.S.-domiciled companies relative to their foreign competitors? And, if so, do inversions improve the competitiveness of U.S. multinational firms both abroad and at home?

There is unfortunately little, if any, empirical work directly determining whether U.S.-based MNCs are currently tax-disadvantaged compared to their foreign rivals, or measuring the amount by which (if any) U.S.-based MNCs improve their competitive position …

The Gordian Knot: How The United States, The European Union, And Organization For Economic Cooperation And Development Took Action Against Corporate Tax Avoidance, Katlyn Twomey

Honors Projects in History and Social Sciences

In 2016, the United States had the highest corporate tax rate in the world. Perhaps, the high tax rate could be why American corporations are holding an estimated $2.5 trillion abroad (Cox 2016). According to a study by the Bureau of Economic Analysis, U.S. firms pay a measly 3% in tax to foreign governments on those profits, rather than the 35% U.S. corporate tax rate. How are these corporations able to legally avoid paying taxes on a large percentage of their profits? Many use various loopholes in the laws to shift profits into other countries or U.S. states referred to …

Taxation Of Non-Residents' Capital Gains, Wei Cui

All Faculty Publications

Designing and enforcing a legal regime for taxing non-residents on capital gains realized from domestic sources is a topic of vital importance for developing countries. The reason is that non-capital-gain income that may be derived from a given country can generally be crystalized in the form of capital gains on the disposition of the income-generating asset. This is true of most important types of income, be it rent, interest, royalty, dividend or business profit. Taxing capital gains, therefore, is invariably needed to ensure that income from assets in the source country is properly subject to tax. In this sense, capital …

Country By Country Reporting And Corporate Privacy: Some Unanswered Questions, Reuven S. Avi-Yonah

Articles

Corporate privacy is an oxymoron. Individuals have a right to privacy, which the Supreme Court has recognized at least since Griswold v. Connecticut (1965). Warren and Brandeis’ famous defense of the right to privacy (1890) clearly applied only to individuals, because only individuals have the kind of feelings that are affected by invasions of privacy. Corporations are legal entities, and the concept of privacy does not apply to them, as the Supreme Court held in 1906. Thus, any objection to making corporate tax returns public cannot rest on the right to privacy. In fact, corporate returns were made public in …

Trade Credit And Taxes, Mihir A. Desai, C. Fritz Foley, James R. Hines Jr.

Articles

This paper analyzes the extent to which tax differences affect the use of trade credit. U.S.-owned affiliates in low-tax countries use trade credit to lend, whereas those in high-tax countries use trade credit to borrow: 10% lower local tax rates are associated with net trade credit positions that are 1.4% higher as a fraction of sales. The use of trade credit to get capital out of low-tax, low-return environments is also illustrated by the temporary repatriation tax holiday in 2005, which was used most intensively by affiliates with positive net trade credit positions.

A Hitchhiker’S Guide To The Oecd’S International Vat/Gst Guidelines, Walter Hellerstein

Scholarly Works

The OECD’s International VAT/GST Guidelines, which were released in their consolidated form at the OECD’s Global Forum on VAT in Paris in late 2015, are the culmination of nearly two decades of efforts to provide internationally accepted standards for consumption taxation of cross-border trade, particularly trade in services and intangibles. This article provides a roadmap to the Guidelines, especially for readers who may be unfamiliar with consumption tax principles, in general, or VATs in particular. Part II of the article provides the background to the Guidelines, describing the basic features of a VAT, the problems with which the Guidelines are …

Waiting For Perseus: A Sur-Reply To Professors Graetz And Warren, Ruth Mason, Michael S. Knoll

All Faculty Scholarship

This manuscript responds to Income Tax Discrimination: Still Stuck in a Labyrinth of Impossibility by Professors Michael Graetz and Alvin Warren (121 Yale L.J. 1118). In that article, Professors Graetz and Warren challenge many of the arguments we made in our own article entitled, “What is Tax Discrimination?” (121 Yale L.J. 1014). In our earlier article, we set out to accomplish two goals. First, we sought to identify the principle behind the doctrine of tax discrimination as that doctrine is applied by the U.S. Supreme Court and the Court of Justice of the European Union (ECJ) and to translate that …

The U.S. Tax System: Where Do We Go From Here?, Adele C. Morris

Brookings Scholar Lecture Series

This talk will explore how the U.S. tax system really works, where revenue comes from, where spending goes, what a tax expenditure is, and discuss deficit prognoses and how the recent political debates could affect our economy. The speaker will highlight some advantages and disadvantages of different budget balancing options.

Americans' Unwillingness To Pay Taxes Before The American Revolution: An Uncomfortable Legacy, Richard A. Westin

Law Faculty Scholarly Articles

When one reflects on the sorry condition of America’s finances one has to wonder why there is such resistance to fiscal discipline. Is it merely because there is an obstreperous group in the US Congress who cannot abide any tax? Has the public been subtly lobbied into believing that American taxes are high, pointless and intolerable or is there some gene in the America’s body politic that has always been there that expresses itself from time to time in a pernicious cheapness? Perhaps all those things are true, or perhaps none. Nevertheless, a glance backward at Colonial days can stimulate …

The Unjustified Subsidy: Sovereign Wealth Funds And The Foreign Sovereign Tax Exemption, Jennifer Bird-Pollan

Law Faculty Scholarly Articles

The taxation of Sovereign Wealth Funds in the United States is outmoded and due for reconsideration. Offering a tax exemption to the billion dollar investment funds owned by foreign governments is both unfair and ineffective. Founded in the principles of sovereign immunity, the foreign sovereign tax exemption, codified in I.R.C. § 892, fails to satisfy the Congressional goals that motivated its creation. This Article explains the current taxation of foreign sovereigns and, by extension, Sovereign Wealth Funds. It then illustrates that the current exemption is simultaneously too broad, providing a tax exemption for activities that are clearly nongovernmental activities, and …

Fiscal Federalism In The United States, Walter Hellerstein

Presentations and Speeches

This presentation explores the fiscal powers of U.S. Federal and State governments with respect to taxation and spending.

The Effective Tax Rate Of The Largest Us And Eu Multinationals, Reuven S. Avi-Yonah, Yaron Lahav

Law & Economics Working Papers

This paper compares the effective tax rates of the 100 largest US multinationals to the 100 largest EU multinationals for the period 2001-2010, based on financial disclosures. The paper finds that despite the higher US statutory rate the effective tax rates are comparable and that EU multinationals tend to have a higher effective tax rate. The likely explanation is that EU corporate taxes have a broader base. The paper concludes that current US tax law does not subject US based multinationals to a competitive disadvantage against their EU based competitors.

An Equity-Based, Multilateral Approach For Sourcing Income Among Nations, Fred B. Brown

All Faculty Scholarship

The source of income rules used in the United States and elsewhere in large part establish the contours of tax jurisdiction exercised by countries. The source rules play a vital role in the foreign tax credit system applicable to U.S. persons with foreign investment or business activities. The source rules also play a central role in the United States’ exercise of source taxation over foreign persons with U.S. businesses or investments. Other countries likewise use source rules or their equivalent in applying foreign tax credit or territorial systems to their residents and exercising source taxation over nonresidents.

The current approach …

Brain Drain Taxation As Development Policy, Yariv Brauner

UF Law Faculty Publications

This article examines the potential use of taxation to generate development funds in connection with the immigration of skilled immigrants from developing into developed countries, known as the "brain drain," if designed according to the principles of the new development agenda. It explains that a tax on the brain drain that has been discussed for several decades, yet considered impossible to administer, may be administratively and legally implementable within the framework of the current international tax regime. It argues that designing such a tax according to the principles of the new development agenda, tying together the collection and use of …

Business Taxes And International Competitiveness: Understanding How Taxes Can Distort Capital Ownership And Designing A Nondistortive International Tax System, Michael S. Knoll

All Faculty Scholarship

Around the world, policymakers are obsessed with the competitiveness of their domestic companies and domestically based multinational corporations (MNCs). Such concerns frequently influence policy, especially tax policy. In this paper, I develop a theory of how taxes affect the international competitiveness of businesses. I then use that theory to evaluate basic tax policy decisions, such as the choice between residence- and source-based taxation and the level of tax rates, and to understand the impact various provisions in the U.S. Internal Revenue Code are likely to have on the competitiveness of U.S.-based corporations and MNCs.

The Case Against Taxing Citizens, Reuven S. Avi-Yonah

Law & Economics Working Papers

The US is the only developed country to tax citizens living permanently overseas on their worldwide income. This rule was created at a time when the income tax applied only to the rich and when some of the rich moved overseas to avoid the draft. We do not have a draft any more, the income tax applies to the middle class, and many more US citizens live permanently overseas for non-tax reasons. In a globalized world, citizenship-based taxation is an anachronism which should be abandoned.

Responses To Tax Treaty Shopping: A Comparative Evaluation, David G. Duff

All Faculty Publications

Over the last 40 years, the world has experienced exponential growth in international trade and investment, as well as the number of bilateral tax treaties which now number roughly 3,000. As the globalization of economic activity has greatly increased opportunities for tax avoidance and evasion, so also has the expansion of the international tax treaty network increased opportunities for taxpayers to take advantage of domestic tax rules and bilateral tax treaties by arranging their affairs in ways that reduce taxes otherwise owing or eliminate them altogether. Regarding many of these arrangements as abusive treaty shopping, the OECD and several member …

Decentralizing Family: An Inclusive Proposal For Individual Tax Filing In The United States, Anthony C. Infanti

Articles

The debate in the United States over individual versus joint federal income tax filing is at something of a crossroads. For decades, progressive - and, particularly, feminist - scholars have urged us to abolish the joint return in favor of individual filing. On the rare occasion when scholars have described what such an individual filing system might look like, the focus has been on the ways in which the traditional family must be accommodated in an individual filing system. These descriptions generally do not take into account - let alone remedy - the tax system’s ongoing failure to address the …

Corporate And International Tax Reform: Long-, Medium-, And Short Term Proposals, Reuven S. Avi-Yonah

Law & Economics Working Papers Archive: 2003-2009

The current controversy surrounding President Obama’s international tax proposals seems like an opportune moment to try to consider them in context. How do these proposals fit in with an agenda for US corporate and international tax reform?

Few observers doubt that such reforms are sorely needed, for several reasons. First, the long-term budgetary outlook is unsustainable. Second, the US corporate tax rate is among the highest in the OECD. Third, the current system raises relatively little revenue and large amounts of corporate income go untaxed. Finally, the system is horrendously convoluted and imposes high transaction costs.

This paper will attempt …

International Law: Private Law In United States Law, Reuven S. Avi-Yonah

Book Chapters

This article discusses some aspects of the development of international economic law in the United States since the end of World War I and the impact it had on the development of international economic law generally, focusing specifically on the three areas in which U.S. law had the most significant impact on international economic law: international trade and investment, international taxation, and international antitrust measures. In general, in all three areas U.S. law had considerable influence on the development of international economic law in the twentieth century. However, the degree of influence in these and other areas varied depending on …

Allocating Business Profits For Tax Purposes: A Proposal To Adopt A Formulary Profit Split, Reuven S. Avi-Yonah, Kimberly A. Clausing, Michael C. Durst

Law & Economics Working Papers Archive: 2003-2009

The current system of taxing the income of multinational firms in the United States is flawed across multiple dimensions. The system provides an artificial tax incentive to earn income in low-tax countries, rewards aggressive tax planning, and is not compatible with any common metrics of efficiency. The U.S. system is also notoriously complex; observers are nearly unanimous in lamenting the heavy compliance burdens and the impracticality of coherent enforcement. Further, despite a corporate tax rate one standard deviation above that of other OECD countries, the U.S. corporate tax system raises relatively little revenue, due in part to the shifting of …