Law Commons^™

Beps, Atap, And The New Tax Dialogue: "A Transatlantic Competition?", Reuven Avi-Yonah, Gianluca Mazzoni

Articles

Since its launch in 2013, the US actively participated in all aspects of the BEPS project. However, until recently, the general view was that following the conclusion of the BEPS negotiations and the change of Administration the US is stepping back from the BEPS process. While the EU was charging ahead with implementing BEPS through the Anti-Tax Avoidance Directive (ATAD), the US stated that it was already in compliance with all BEPS minimum standards and therefore other than Country-by-Country Reporting (CbCR) it had no further BEPS obligations. The US decided not to sign the Multilateral Instrument (MLI) to implement BEPS …

A Global Treaty Override? The New Oecd Multilateral Tax Instrument And Its Limits, Reuven S. Avi-Yonah, Haiyan Xu

Michigan Journal of International Law

This article will proceed as follows. Section 2 summarizes the main provisions of the MLI. Section 3 discusses the purpose of tax treaties in the twenty-first century, because it can be argued that they are less necessary under conditions of tax competition. Section 4 raises the question whether tax treaties can be improved short of a full-fledged multilateral tax treaty by inserting a most favored nation (MFN) provision similar to those found in bilateral investment treaties. Such an MFN provision operates over time to create a de facto multilateral treaty without the negotiation of one. Section 5 concludes this article.

Personal Jurisdiction And Aliens, William S. Dodge, Scott Dodson

Michigan Law Review

The increasing prevalence of noncitizens in U.S. civil litigation raises a funda-mental question for the doctrine of personal jurisdiction: How should the alienage status of a defendant affect personal jurisdiction? This fundamental question comes at a time of increasing Supreme Court focus on personal juris-diction, in cases like Bristol–Myers Squibb Co. v. Superior Court, Daimler AG v. Bauman, and J. McIntyre Machinery, Ltd. v. Nicastro. We aim to answer that question by offering a theory of personal jurisdiction over aliens. Under this theory, alienage status broadens the geographic range for mini-mum contacts from a single state to the whole nation. …

Tax Havens As Producers Of Corporate Law, William J. Moon

Michigan Law Review

A review of Christopher M. Bruner, Re-Imagining Offshore Finance: Market-Dominant Small Jurisdictions in a Globalizing Financial World.

A Unifying Approach To Nexus Under The Dormant Commerce Clause, Adam B. Thimmesch

Michigan Law Review Online

The Supreme Court has long debated the existence and scope of its power to restrict state regulation under the so-called negative or dormant Commerce Clause. The Court took a broad view of that power in the late 1800s, but it has refined and restricted its role over time. One area where the Court has continued to wield considerable power, however, has been in the context of state taxes. Specifically, the Court has continued to restrict states' power to compel out-of-state vendors to collect their sales and use taxes based on a physical-presence "nexus" rule. That rule dates back to the …

Innovative Approach To Anti-Beps And The Coherence Of International Tax Law, Haiyan Xu

SJD Dissertations

This dissertation is comprised of three articles:

• Avi-Yonah, Reuven,. co-author. "Evaluating BEPS: A Reconsideration of the Benefits Principle and Proposal for UN Oversight." H. Xu, co-author. Harv. Bus. L. Rev. 6, no. 2 (2016): 185-238
• Reuven S. Avi-Yonah & Haiyan Xu, A Global Treaty Override? The New OECD Multilateral Tax Instrument and Its Limits, 39 Mich. J. Int'l L. 155 (2018).
• Avi-Yonah, Reuven S. "China and BEPS." Haiyan Xu, co-author. Laws 7, no. 1 (2018): 4-30.

Once More, With Feeling: The 'Tax Cuts And Jobs' Act And The Original Intent Of Subpart F, Reuven S. Avi-Yonah, Nir Fishbien

Law & Economics Working Papers

For the first time since 1913, Congress is considering abandoning the principle that US residents should be subject to tax on all income “from whatever source derived.” Specifically, the House proposed tax reform legislation, the so-called “Tax Cuts and Jobs Act”, would completely exempt from US taxation dividends from “Controlled Foreign Corporations”. This is therefore a good occasion for considering the reasons we tax such dividends in the first place.

In the course of investigating the Stanley Surrey papers at the Harvard Law School Library, we discovered a remarkable report that support the view that the main impetus behind Subpart …

Evaluating Beps, Reuven Avi-Yonah, Haiyan Xu

Articles

This article evaluates the recently completed Base Erosion and Profit Shifting (BEPS) project of the G20 and OECD and offers some alternatives for reform.

Source, Character And Taxable Presence In A Digital World: International Taxation Of Online Advertising, Assaf Prussak

SJD Dissertations

The purpose of this dissertation is to examine the application of the U.S. and international tax rules and norms to income derived from online advertising, to consider the challenges and problems that arise when these rules are applied to such a purely-digital type of income, to propose an alternative framework for the taxation of online advertising, and to discuss the legislative measures adopted by various countries in an attempt to tax this type of income (and other income derived from digital-based activities).

Tax Symposium: Introduction, Reuven S. Avi-Yonah

Michigan Journal of International Law

This issue of MJIL features four out of the many outstanding papers that were presented at a conference on Taxation and Citizenship held at Michigan Law in October 2015 and co-organized by Allison Christians and myself. The impetus for the conference was the realization that the unique U.S. practice of taxing its citizens on worldwide income, regardless of where they reside, has become a major flashpoint in the relationship between the United States and its citizens living overseas, and sometimes also between the United States and the country those citizens resided in.

Citizenship Overreach, Peter J. Spiro

Michigan Journal of International Law

This Article examines international law limitations on the ascription of citizenship and national self-definition. The United States is exceptionally generous in its extension of citizenship. Alone among the major developed states, it extends citizenship to almost all persons in its territory at the moment of birth. This birthright citizenship is constitutionally protected under the Fourteenth Amendment. At the same time that it is generous at the front end, U.S. citizenship is sticky at the back. Termination of citizenship on the individual’s part can involve substantial fees. Expatriation is contingent on tax compliance and, in some cases, will implicate the recognition …

A Global Perspective On Citizenship-Based Taxation, Allison Christians

Michigan Journal of International Law

This Article contends that, with regard to individuals who reside permanently outside of the United States, the global assistance sought under FATCA to enforce U.S. income taxation solely on the basis of citizenship violates international law. It argues that insisting upon foreign cooperation with the FATCA regime, under threat of serious economic penalties, is inconsistent with universally accepted norms regarding appropriate limits to the state’s jurisdiction to tax, while also being normatively unjustified. Accordingly, FATCA should be rejected by all other nation states to the extent it imposes any obligations with respect to individuals who permanently reside outside of, and …

Minimalism About Residence And Source, Wei Cui

Michigan Journal of International Law

In this Article, I relate the discomfort with fundamental principles in taxing individuals’ worldwide income to a problem that has attracted greater attention in recent years: the assignment of geographical sources to income. I suggest that there is substantial similarity between critiques of residence rules (of which critiques of citizenship-based taxation are examples) and critiques of source rules. However, I argue that problematic residence and source rules are only symptoms, not causes, of unsatisfactory conceptual paradigms in international taxation. Many scholars portray source and residence rules as inadequate means for achieving purportedly given normative objectives in the age of intense …

Defining Residence For Income Tax Purposes: Domicile As Gap-Filler, Citizenship As Proxy And Gap-Filler, Edward A. Zelinsky

Michigan Journal of International Law

In this paper, I place the United States’ adherence to citizenship-based taxation in the context of the states’ tax systems. Forty-one states impose general income taxes on the worldwide incomes of their respective residents. These state tax systems are important repositories of experience that confirm the administrative benefits of citizenship-based taxation. Domicile today plays an important role in state tax systems as a gap-filler when more objective statutory residence laws fail to assign any state of residence to the taxpayer. Citizenship is an administrable proxy for domicile and serves a similar gap-filling role in the taxation of individuals whose income …

From Avoiding ‘Double Taxation’ Yesterday To Avoiding ‘Double Non-Taxation’ Today: The Urgent Need For An International Tax Regime Based On Unitary Tax Principles, Zachée Pouga Tinhaga

SJD Dissertations

The purpose of this Dissertation is to analyze the current ills of the international tax system with a special focus on developing countries, and to structure and present a Unitary Taxation System (“UT”) as a solution to the legitimate and multifaceted complaints about current international taxation of multinational companies (“MNEs”). The research aims at presenting a UT that would restore credibility in the international tax arena by providing fiscal predictability and certainty to MNEs, and ensuring appropriate taxation by all countries (specifically developing nations) of all “real” economic activity within their borders. Although this issue has been previously explored, there …

Evaluating Beps: A Reconsideration Of The Benefits Principle And Proposal For Un Oversight, Reuven Avi-Yonah, Haiyan Xu

Articles

The Financial Crisis of 2008 and Great Recession that followed have exacerbated income inequality within and between countries. In the aftermath of the economic turbulence, politicians have turned their attention to the twin problems of individual tax evasion and corporate tax avoidance. U.S. legislators enacted the Foreign Account Tax Compliance Act (FACTA), leading to the United States signing a series of Intergovernmental Agreements (IGAs) for the exchange of tax information. The Organization for Economic Co-operation and Development (OECD) developed the Multilateral Agreement for Administrative Assistance in Tax Matters (MAATM) and initiated the Base Erosion and Profit Shifting (BEPS) project to …

Loopholes For Circumventing The Constitution: Unrestrained Bulk Surveillance On Americans By Collecting Network Traffic Abroad, Axel Arnbak, Sharon Goldberg

Michigan Telecommunications & Technology Law Review

This Article reveals interdependent legal and technical loopholes that the US intelligence community could use to circumvent constitutional and statutory safeguards for Americans. These loopholes involve the collection of Internet traffic on foreign territory, and leave Americans as unprotected as foreigners by current United States (US) surveillance laws. This Article will also describe how modern Internet protocols can be manipulated to deliberately divert American’s traffic abroad, where traffic can then be collected under a more permissive legal regime (Executive Order 12333) that is overseen solely by the executive branch of the US government. Although the media has reported on some …

Who Invented The Single Tax Principle?: An Essay On The History Of Us Treaty Policy, Reuven S. Avi-Yonah

Articles

In 1997, I wrote an article on the international tax challenges posed by the then-nascent electronic commerce, in which I suggested that the international tax regime is based on two principles: the benefits principle and the single tax principle. The benefits principle states that active (business) income should be taxed primarily by the country of source, and passive (investment) income should be taxed primarily by the country of residence. This is the famous compromise reached by the four economists at the foundation of the regime in 1923 and is not particularly controversial. It is embodied in every one of the …

Reconstructing The Effective Control Criterion In Extraterritorial Human Rights Breaches: Direct Attribution Of Wrongfulness, Due Diligence, And Concurrent Responsibility, Vassilis P. Tzevelekos

Michigan Journal of International Law

As one of the core elements of statehood, territory is inextricably linked to sovereignty. For this reason, jurisdiction is primarily territorial. In principle, the sphere of power of the sovereign state—including its competence to exercise legislative, judicial, and executive authority—applies within the confines of its own territory. Otherwise, the state risks interfering with the sovereignty of other states and thereby breaking one of the fundamental principles of Public International Law (PIL), that of sovereign equality. The principle of sovereign equality dictates that all assertions of jurisdiction have to be balanced with the sovereign rights of other states. This is why …

Formulary Appointment In The U.S. International Income Tax System: Putting Lipstick On A Pig?, J. Clifton Fleming Jr., Robert J. Peroni, Stephen E. Shay

Michigan Journal of International Law

An affiliated corporate group consists of two or more corporations linked by sufficient stock ownership to cause them to function as an economic unit instead of as independent economic actors. Thus, an affiliated corporate group engaged in international business is often referred to as a multinational enterprise (MNE), a term that we will use throughout this Article. When corporate members of an MNE engage in transactions among themselves, the prices they employ (transfer prices) will significantly affect the amount of overall MNE income that is allocated to each member and, hence, to the tax bases of the various countries in …

Beyond Carve-Outs And Toward Reliance: A Normative Framework For Cross-Border Insolvency Choice Of Law, John A. E. Pottow

Articles

The title of this Article purports to develop a normative framework for cross-border insolvency choice of law. That can be a task of varying scope, so at the outset any pretense of ambition for a wholly new choice of law model should be dispelled. Indeed, at the most generalized level, bankruptcy choice of law theory has already been fully ventilated in the well-rehearsed universalism versus territorialism debates. And it has been settled. The universalists, at least as a normative matter, appear to have won: choice of law, as it is increasingly accepted, should be determined by the debtor's center of …

The Devil In The Details: Reflections On The Camp Draft, Reuven S. Avi-Yonah

Articles

The discussion draft of the Tax Reform Act of 2014 (TRA 14) released by House Ways and Means Committee Chair Dave Camp, R-Mich., on February 26 represents a major effort for fundamental and far-reaching reform of U.S. tax law. Unfortunately, while many parts of the proposal seem sensible as an effort to bring back the spirit of 1986, the international tax reform proposals are deeply flawed and based on obsolete assumptions of the world that faces U.S. multinationals in 2014.

A Material World: Using Trademark Law To Override Copyright's First Sale Rule For Imported Copies, Mary Lafrance

Michigan Telecommunications & Technology Law Review

When the Supreme Court held that the first sale rule of copyright law permits the unauthorized importation and domestic sale of lawfully made copies of copyrighted works, regardless of where those copies were made, copyright owners lost much of their ability to engage in territorial price discrimination. Publishers, film and record producers, and software and videogame makers could no longer use copyright law to prevent the importation and domestic resale of gray market copies, and therefore could no longer protect their domestic distributors against competition from cheaper imported copies. However, many of these copyright owners can take advantage of a …

Why Y? Reflections On The Baucus Proposal, Reuven S. Avi-Yonah

Articles

The international tax reform proposal introduced by Sen. Max Baucus, D-Mont., on November 19 contains several significant innovations that promise to define the terms of the debate for the foreseeable political future. (Prior coverage: Tax Notes Int’l, Nov. 25, 2013, p. 691.) It is therefore worth examining in detail even if it seems unlikely that progress toward meaningful reform can be achieved very soon.

Arguments For And Against Territoriality, Reuven S. Avi-Yonah

Articles

The tax on dividends from the active income of controlled foreign corporations meets the criteria for a bad tax: It raises little revenue but significantly affects taxpayer behavior in undesirable ways.

Territoriality: For And Against, Reuven S. Avi-Yonah

Articles

The tax on dividends from the active income of controlled foreign corporations meets the criteria for a bad tax: It raises little revenue but significantly affects taxpayer behavior in undesirable ways.

Geographically Restricted Streaming Content And Evasion Of Geolocation: The Applicability Of The Copyright Anticircumvention Rules, Jerusha Burnett

Michigan Telecommunications & Technology Law Review

A number of methods currently exist or are being developed to determine where Internet users are located geographically when they access a particular webpage. Yet regardless of the precautions taken by website operators to limit the locations from which they allow access, it is likely that users will find ways to gain access to restricted content. Should the evasion of geolocation constitute circumvention of access controls so that § 1201 of the Digital Millennium Copyright Act ("DMCA") applies? Because location data can properly be considered personally identifiable information ("PII"), this Note argues that § 1201 should not apply absent a …

Corporate And International Tax Reform: Proposals For The Second Obama Administration (And Beyond), Reuven S. Avi-Yonah

Articles

The passage of the American Taxpayer Relief Act of 2012 (ATRA) offers an opportune moment to consider proposals for corporate and international tax reform. With the debate over individual tax rates for the income and estate tax settled for the present, the President and Congress are free to consider broader reforms. Few observers doubt that such reforms are sorely needed, for several reasons. First, the long-term budgetary outlook is unsustainable. Second, the U.S. corporate tax rate is the highest in the Organisation for Economic Co-Operation and Development (OECD). Third, the current system raises relatively little revenue and large amounts of …

Tax Competition And The Case Of Bank Secrecy Rules: New Trends In International Tax Law, Linneu De Albuquerque Mello

SJD Dissertations

The current integration of world markets has led to an increase in the competition for businesses in addition to the competition for passive investments that already existed. In addition, the current financial crisis led countries to search for additional sources of revenue in order to work within their budget constraints. As tax is an area where such competition is more visible, it has also generated an effort – mainly from industrialized countries and international organizations – to curb tax practices deemed harmful to world economy. Bank secrecy rules and lack of transparency are aspects of these "harmful" tax practices. This …

A New Role For Secondary Proceedings In International Bankruptcies, John A. E. Pottow

Articles

Secondary proceedings-the ugly stepsisters to main proceedings-get short shrift in international bankruptcy scholarship. This article seeks to remedy that deficiency. First, it describes what it argues are the traditional conceptions-both stated and implicit-of secondary proceedings in international bankruptcies. Second, it offers a revised way of thinking about secondary proceedings, proposing to restrict their scope through the use of "synthetic" hearings. Third, it addresses some problems with the proposed new role of secondary proceedings and sketches a possible solution involving the creation of an international priorities registry.