Law Commons^™

Taxes And Competitiveness, Michael S. Knoll

All Faculty Scholarship

Around the world, the tax laws are shaped by concerns with competitiveness. This paper provides a general theory of how taxes impact competitiveness. As part of that theory, this paper also introduces the concept of tax-based competitiveness neutrality. A tax system is competitively neutral when taxes do not cause competitors to change their relative valuations of any investments. This paper then uses that theory to evaluate tax policy in two high profile and important areas. The paper begins by describing two models of competitiveness, called the conduit or new money model and the investor or old money model. The central …

Unjust Enrichment And Wrongly Paid Tax, Hang Wu Tang

Research Collection Yong Pung How School Of Law

Boake Allen Limited v. Revenue and Customs Commissioners [2006] EWCA Civ 25 concerned early payment of Advance Corporation Tax ("ACT"). ACT was normally payable when a company paid dividends to its shareholders, but there was a statutory exception where the company was a subsidiary of a United Kingdom company and both the parent and subsidiary made a group income election. If the tax authorities accepted the election, the obligation to pay ACT would only accrue when the parent company paid dividends. Section 247 of the Income and Corporation Taxes Act 1988 ("ICTA") stipulated that group income elections were only available …

Taxing Services Under The Eu Vat And Japanese Consumption Tax: A Comparative Assessment Of New Eu Place Of Taxation Rules For Services And Intangibles, Richard Thompson Ainsworth

Faculty Scholarship

Place of taxation rules are the seminal cross-jurisdictional provisions of any consumption tax regime. They determine where among competing jurisdictions a particular service is taxed. They are not important for transactions that are restricted to a single jurisdiction and to businesses or individuals belonging to that jurisdiction. However, when two or more jurisdictions are involved, these are the essential tools for revenue allocation and avoidance of double taxation.

It is therefore of considerable importance to Japanese businesses and consumers when the European Union (EU) undertakes a wholesale revision of the place of supply rules for services and intangibles. The European …

Digital Consumption Tax (D-Ct), Richard Thompson Ainsworth

Faculty Scholarship

Modern technology is dramatically changing the way consumption taxes are collected, but it is also changing the way policymakers assess the operation and impact of these taxes. Whether the design is a standard credit-invoice value added tax (VAT) of European design, or a retail sales tax (RST) of American design, or the credit subtraction VAT without invoices type of consumption tax (CT) of Japanese design, technology is having a profound impact.

Government certified transaction software is in place in the United States. The Streamlined Sales Tax offers taxpayers in 18 states the option of having their retail sales tax determined …

Reforming The Branch Profits Tax To Advance Neutrality, Fred B. Brown

All Faculty Scholarship

Congress enacted the branch profits tax in order to reduce the disparity between the taxation of U.S. subsidiaries and U.S. branches of foreign corporations. The branch profits tax attempts to promote neutrality by subjecting the U.S. branch earnings of a foreign corporation to a second level of U.S. tax upon the deemed remittance of the earnings outside of the U.S. branch. This is to approximate the second-level tax that occurs in the subsidiary setting when a U.S. subsidiary pays dividends to its foreign parent. Unlike the dividend tax in the subsidiary setting, however, the branch profits tax can apply even …

Harmful Tax Competition And Its Harmful Remedies, James R. Hines Jr.

Reviews

There is, among some of your reviewer's friends, an abhorrence of tax competition, and a fascination with tax harmonization, that defies simple understanding. The way that the case is typically presented, European tax harmonization is desirable because eliminating tax differences between European nations would promote economic efficiency. With greater economic efficiency, there is more of everything to go around, so it becomes possible to maintain life exactly as it currently is, except that now, instead of every family having one toaster, they can have two. A wise goal, a worthy goal, this economic efficiency-though the drive to eke more out …

Tax Treaty Overrides: A Qualified Defence Of U.S. Practice, Reuven S. Avi-Yonah

Book Chapters

The ability of some countries to unilaterally change, or "override;' their tax treaties through domestic legislation has frequently been identified as a serious threat to the bilateral tax treaty network. In most countries, treaties (including tax treaties) have a status superior to that of ordinary domestic laws (see, e.g. France, Germany, the Netherlands). However, in some countries (primarily the US, but also to some extent the UK and Australia) treaties can be changed unilaterally by subsequent domestic legislation. This result clearly violates international law as embodied by the Vienna Convention on the Law of Treaties ("VCLT"), which is recognized as …

The Three Goals Of Taxation, Reuven S. Avi-Yonah

Articles

The current debate in the United States about whether the income tax should be replaced with a consumption tax has been waged on the traditional grounds for evaluating tax policy: efficiency, equity, and administrability. For example, Joseph Bankman and David Weisbach recently argued for the superiority of an ideal consumption tax over an ideal income tax on three grounds: First, that the consumption tax is more efficient because it does not discriminate between current and future consumption,' while both income and consumption taxes have identical effect on work effort. Second, that the consumption tax is at least as good at …

Income Tax Discrimination And The Political And Economic Integration Of Europe, Michael J. Graetz, Alvin C. Warren Jr.

Faculty Scholarship

In recent years, the European Court of Justice (ECJ) has invalidated many income tax law provisions of European Union (EU) member states as violating European constitutional treaty guarantees of freedom of movement for goods, services, persons, and capital. These decisions have not, however, been matched by significant EU income tax legislation, because no EU political institution has the power to enact such legislation without unanimous consent from the member states. In this Article, we describe how the developing ECJ jurisprudence threatens the ability of member states to use tax incentives to stimulate their domestic economies and to resolve problems of …

Taxation And Multinational Activity: New Evidence, New Interpretations, Mihir A. Desai, C. Fritz Foley, James R. Hines Jr.

Articles

In the midst of rapid integration and globalization, multinational firms still face tax systems that differ among countries, and these differences have the potential to affect major investment and financing decisions. This research covers a wide range of topics, including the impact of indirect taxes as well as of corporate income taxes, the sensitivity of financing decisions to tax rates, the effects of taxes on repatriation policies, the demand for, and impact of, tax havens, and the use of indirect ownership as a means of avoiding taxes. The behavior of US multinational firms as revealed by the evidence collected by …

Tax Arbitrage And The International Tax Regime, Reuven S. Avi-Yonah

Book Chapters

It is a great pleasure to introduce my student Luca Dell'Anese's book on tax arbitrage. This is an important book on an important topic, which lies at the heart of the current debate on whether an international tax regime exists in practice.

I have argued for many years (see, e.g., Avi-Yonah, 1996, 1997, 2000) that a coherent international tax regime exists, embodied in both the tax treaty network and in domestic laws, and that it forms a significant part of international law (both treatybased and customary). The practical implication is that countries are not free to adopt any international tax …

The Future Of The Dormant Commerce Clause: Abolishing The Prohibition On Discriminatory Taxation, Edward A. Zelinsky, Brannon P. Denning

Articles

Professor Edward A. Zelinsky, of the Cardozo School of Law, argues that "[i] t is time to abolish the dormant Commence Clause prohibition on discriminatory taxation." This is so, he writes, because "the prohibition is today doctrinally incoherent and politically unnecessary." The incoherence, Zelinsky maintains, stems from the disparate treatment by the United States Supreme Court of economically identical activities: "discriminatory taxation favoring local industries," which the doctrine prohibits, and "direct expenditures subsidizing those same industries," which it permits. It is unnecessary, Zelinsky argues, because Congress is able, and better suited, to police any state abuses. In short, "[l]ike a …

Cuno: The Property Tax Issue, Edward A. Zelinsky

Articles

The author criticizes the decision of the U.S. Court of Appeals for the Sixth Circuit in Cuno v. DaimlerChrysler Inc., in which the court ruled that Ohio's investment tax credit violated the U.S. Constitution's Commerce Clause. Zelinsky says the dormant Commerce Clause concept of nondiscrimination is overbroad and undefinable and should be abandoned. He hopes this decision will give the U.S. Supreme Court an opportunity to reassess the concept.

Comparative Fiscal Federalism: What Can The U.S. Supreme Court And The European Court Of Justice Learn From Each Other's Tax Jurisprudence?, Reuven S. Avi-Yonah

Articles

Last October, a group of distinguished tax experts from the European Union and the United States convened at the University of Michigan Law School for a conference on "Comparative Fiscal Federalism: Comparing the U.S. Supreme Court and European Court of Justice Tax Jurisprudence." The conference was sponsored by the Law School, the European Union Center, and Harvard Law School's Fund for Tax and Fiscal Research. Attendees from Europe included Michel Aujean, the principal tax official at the EU Commission, Servaas van Thie1, chief tax advisor to the EU Council, Michael Lang (Vienna) and Kees van Raad (Leiden), who run the …