Taxation-Transnational Commons^™

International Tax As International Law, Reuven S. Avi-Yonah

Law & Economics Working Papers Archive: 2003-2009

The purpose of this article is to introduce to the international lawyer the somewhat different set of categories (e.g., residence and source rather than nationality and territoriality) employed by international tax lawyers, and explain the reasons for some of the differences. At the same time, it attempts to persuade practicing international tax lawyers and international tax academics that their field is indeed part of international law, and that it would help them to think of it this way. For example, knowledge of the Vienna Convention on the Law of Treaties would help international tax lawyers in interpreting tax treaties, and …

The European Commission’S Report On Company Income Taxation: What The Eu Can Learn From The Experience Of The Us States, Walter Hellerstein

Scholarly Works

The European Union Commission has proposed using consolidated base taxation and formulary apportionment to tax the EU-source income of multinational companies. This paper examines US state experience with a similar approach. Despite some positive lessons, especially the need to consolidate income of affiliated companies, lessons are mostly negative, especially regarding the choice of apportionment formula, the use of economic criteria to define the group whose income is to be consolidated, and complexity caused by lack of uniformity. US experience says nothing about using value added to apportion income—an approach that is conceptually attractive, but subject to transfer pricing problems.

The Tax Treatment Of International Philanthropy And Public Policy, Robert Paine

Akron Tax Journal

This paper concerns the tax treatment of charitable contributions made to foreign organizations. Specifically, it discusses the current tax structure that governs contributions made by United States taxpayers to charitable organizations located outside the U.S. and its possessions.

Tax Competition: Harmful To Whom?, Michael Littlewood

Michigan Journal of International Law

The aim of this paper is to examine the theory that it is both desirable and feasible to prevent less-developed countries from operating preferential tax regimes (that is, offering tax incentives) as a means of attracting foreign investment.

International Tax Law As International Law, Reuven S. Avi-Yonah

Articles

Is international tax law part of international law? To an international lawyer, the question posed probably seems ridiculous. Of course international tax law is part of international law, just like tax treaties are treaties. But to an international tax lawyer, the question probably seems less obvious, because most international tax lawyers do not think of themselves primarily as international lawyers (public or private), but rather as tax lawyers who happen to deal with crossborder transactions. And indeed, once one delves into the details, it becomes clear that in some ways international tax law is different from "regular" international law. For …

The Neglected Role Of International Altruistic Investment In The Chinese Transition Economy, Darryll K. Jones

Journal Publications

This Article discusses the positive role of altruistic investment in any transition economy by making specific reference to altruistic investment in the Chinese economic transition. The Article discusses the social welfare hardships arising from the transition process and then discusses the U.S. and Chinese tax incentives and barriers to altruistic investment that would lessen that hardship. After that, the Article discusses the reasons why both countries might prefer to retain those barriers. Finally, the Article concludes that altruistic investment has more positive then negative consequences and makes a simple proposal to stimulate altruistic investment in China in a manner that …

Wither Firpta, Fred B. Brown

All Faculty Scholarship

Under FIRPTA, foreign persons are subject to U.S. tax on dispositions of directly held interests in U.S. real property as well as on dispositions of stock in certain U.S. real property holding corporations. Congress enacted FIRPTA to combat several techniques used by foreign persons to avoid U.S. tax on dispositions of U.S. real estate. However, since FIRPTA's enactment, changes in the tax law would defeat these tax avoidance techniques. Consequently, this raises the issue of whether FIRPTA continues to make sense as a policy matter.

This article suggests that the repeal of portions of FIRPTA may be in order and …

International Income Taxation, Michael Graetz

Faculty Scholarship

Much of what I will say here today is distilled from articles that I have written and things I have learned in putting together a book called Foundations of International Taxation.

It is difficult enough to fashion sensible tax policy in the domestic arena. The debate, for example, over whether the United States should impose a value-added tax has some international aspects, but it is primarily a debate about domestic policy. This is true generally about the debate over how much we should rely on income versus consumption taxation. This debate amply illustrates how hard it is to obtain agreement …

Scrubbing The Wash Sale Rules, David M. Schizer

Faculty Scholarship

Loss limitations are an ugly but inevitable feature of any realization-based income tax. In essence, because the system mismeasures gains, it also has to mismeasure losses. Otherwise, the "timing option" inherent in the realization rule would allow taxpayers to defer gains (thereby reducing the tax's present value) while accelerating losses (thereby preserving the deduction's present value). This "strategic trading" would erode the tax on risky positions, leading to inefficiencies as taxpayers developed a taste for risky positions, became "locked in" to appreciated positions, and sold loss positions they otherwise would keep. Distributional issues also would arise as the effective tax …

Bridging The North/South Divide: International Redistribution And Tax Competition, Reuven S. Avi-Yonah

Articles

The most important social problem facing humanity at the beginning of the 21st century is the yawning divide in standards of living between the rich nations of the global North and the poor nations of the global South. The following table gives some indicia of the current gap in living standards. It shows that the majority of the population in most developing countries lives on less than two dollars a day; that in some developing countries, over a quarter of children aged 10-14 are employed in the work force; that mortality for children under five in developing countries can be …

American Offshore Business Tax Planning: Can Australian Lawyers Get A Piece Of The Action?, J Clifton Fleming, Jr.

Faculty Scholarship

No abstract provided.

International Valuation Guidance Note No. 6

William & Mary Annual Tax Conference

No abstract provided.

A Broader View Of Corporate Inversions: The Interplay Of Tax, Corporate And Economic Implications, Orsolya Kun

ExpressO

Multinational corporations have, in substantial numbers, moved their corporate residence from the U.S. to Bermuda, for the purpuse of minimizing U.S. taxation on their worldwide income. This study reviews the forms of these "corporate inversion transactions," and explores their tax implications, as well as their corporate governance implications and motivations. It is the first scholarly study to examine the corporate governance implications of inversions, and it concludes that previously unexplored aspects of the change of corporate domicile result in substantial reduction of accountability of directors and officers and significant impediments to enforcement of shareholder rights.

Fight Or Flight Of U.S.-Based Multinational Businesses: Analyzing The Causes For, Effects Of, And Solutions To The Corporate Inversion Trend, Hale E. Sheppard

Northwestern Journal of International Law & Business

When a person is confronted by a threat, he or she experiences a psychological and physiological response commonly known as "fight or flight." In general, this innate survival mechanism causes the body to direct blood to vital areas and to release lactic acid, adrenaline and other chemicals in order to prepare a person to either face the threat or flee immediately. Multinational corporations based in the United States, likewise, have recently displayed similar fight-or-flight behavior when faced with the threat of high taxes. Unfortunately for the U.S. economy, a growing number of these American corporations have chosen the latter: flight. …

An International Tax Regime In Crystallization, Yariv Brauner

UF Law Faculty Publications

The grand illusion of a single, worldwide, tax system that will eliminate all international inefficiencies, and assist all the nations of the world to maximize their relative advantages, is, as commonly accepted, utopian. The tax, academic and professional, writing in the field of international taxation, and cross-border interaction, between tax systems and jurisdictions has grown, exponentially, in the last decade, but no significant work has been done to prove, or disprove, the naivety of this hypothesis. Some scholars and tax executives, in certain international organizations, have discussed ideas along this line, but no single organization has, seriously, attempted to promote …

Clicks And Mortar: Taxing Multinational Business Profits In The Digital Age, Aldo Forgione

Seattle University Law Review

This Article argues that governments should abandon the treaty concept of permanent establishment and adopt international tax reforms that restore the primacy of "market country taxation of multi-national business profits promoted by domestic tax laws. Part I explores several emerging e-commerce issues that demonstrate the tension of introducing traditional tax norms to a digital environment. Part II reviews historical and recent developments in the international taxation of business profits and looks at the underlying trends and sentiments for reform of the existing system of global taxation of business income. Part III canvasses several prominent international tax reform alternatives proposed by …

Put-Call Parity And The Law, Michael S. Knoll

Cardozo Law Review

No abstract provided.

The Once And Future Property Tax: A Dialogue With My Younger Self, Edward A. Zelinsky

Cardozo Law Review

No abstract provided.

Racketeering, Rico And The Revenue Rule In Attorney General Of Canada V. R.J. Reynolds: Civil Rico Claims For Foreign Tax Law Violations, Elizabeth J. Farnam

Washington Law Review

When Congress passed the Racketeer Influenced Corrupt Organizations Act (RICO), it created a civil cause of action for any entity, including a foreign government, to recover for injury caused by a defendant's pattern of racketeering activity. However, Congress did not expressly indicate how the revenue rule, a conflict of laws doctrine that allows a court to decline to enforce a foreign government's tax claim or judgment, would relate to civil RICO claims. In Attorney General of Canada v. R.J. Reynolds Tobacco Holdings, Inc., the United States Court of Appeals for the Second Circuit held that the revenue rule barred …

For Haven's Sake: Reflections On Inversion Transactions, Reuven S. Avi-Yonah

Articles

This article discusses “inversion” transactions, in which a publicly traded U.S. corporation becomes a subsidiary of a newly established tax haven parent corporation. In the last three years, an increasing number of these transactions have been taking place, undeterred by the shareholderlevel tax imposed by the IRS on them in 1994. The article first discusses the reasons for the increasing popularity of the transactions and the tax goals they aim at achieving (primarily avoiding subpart F and U.S. earnings stripping). The article then discusses the tax policy implications of these transactions. In the short run, the article suggests that the …

Optimal International Taxation And Tax Competition: Overcoming The Contradictions, William B. Barker

Northwestern Journal of International Law & Business

This paper presents a theory of international taxation based on a new approach to source taxation that reflects world development and synthesizes the objectives of economic efficiency, fairness to taxpayers, and fairness to governments. Adoption of this model results in the preservation of comprehensive income taxation to capital-exporting nations and an expenditure tax base for capital-importing nations. The system would reduce much of the distortion caused by tax competition, eliminating the tax incentive for businesses to use productive assets and technologies outside the country of their development and saving the jobs of many workers.

Foreign Sales Corporations--Subsidies, Sanctions, And Trade Wars, Candace Carmichael

Vanderbilt Journal of Transnational Law

The largest sanctions in the history of the World Trade Organization, the need to stabilize an ailing economy, and the need to maintain strong alliances in the face of a new global war on terrorism are all issues the United States currently faces in deciding how to resolve its dispute with the European Union regarding U.S. tax policy. In 1997, the European Union filed a complaint with the WTO claiming that the then-current U.S. tax regime violated U.S. international trade agreements. The European Union contended that the U.S. tax system gave rise to export-contingent subsidies, in violation of U.S. trade …

Shortcomings In U.S. Federal Tax Regulatory Regime Of Private Foundations: Insights For Australia, Nina J. Crimm

Vanderbilt Journal of Transnational Law

This Article addresses the need for a more comprehensive regulatory scheme of Australia's nonprofit organizations, particularly its private foundation type structures. By considering the strengths, and more importantly, the weaknesses of the U.S. tax regime of private foundations, Australia can avoid pitfalls that accompany the development of Australia's laws and regulations. The Article begins by exploring the history, nature, and culture of Australia's nonprofit sector. After outlining the structure of the sector, the Article focuses on the potential for abuses if prescribed private funds are not given appropriate attention to avoid such abuses. Then, the Author details the U.S. nonprofit …

Spontaneous Tax Coordination: On Adopting A Comparative Approach To Reforming The U.S. International Tax Regime, Anthony C. Infanti

Vanderbilt Journal of Transnational Law

The excessive complexity of the U.S. international tax regime is well documented. Although many commentators have cited the need for simplification, their proposals often maximize other policy goals at the expense of simplicity. Even reform proposals aimed principally at clarifying the tax code are ordinarily focused on the "internal" complexity of the code, seeking improvements only for U.S. taxpayers struggling with a single complex provision of the code or the baffling interaction, of two U.S. rules. This Article focuses on the interaction between U.S. tax law and the rules of other nations, and is intended to illustrate the benefits that …

Avoiding A Nuclear Trade War: Strategies For Retaining Tax Incentives For U.S. Corporations In A Post-Fsc World, Carrie A. Von Hoff

Vanderbilt Journal of Transnational Law

On January 14, 2002, the World Trade Organization (WTO) Appellate Body affirmed that the FSC Repeal and Extraterritorial Income (ETI) Exclusion Act, a replacement for the Foreign Sales Corporation (FSC) Act, was an unlawful export subsidy under WTO agreements. Though the European Union has indicated a willingness to wait before imposing the largest trade sanctions in the history of the WTO, it insists that the United States comply with the ruling. This Note explores the history of the conflict and considers possibilities for the future of international trade taxation.

This Note first examines the background to the conflict, beginning with …

The Interaction Of Tax And Non-Tax Treaties, Robert A. Green

Cornell Law Faculty Publications

This background note consists of two parts. Part one provides an overview of the extent to which tax matters are currently covered in non-tax treaties. This discussion focuses on the general agreement on tariffs and trade (GATT)/World Trade Organization (WTO) agreement and the North American free trade agreement (NAFTA) (which cover direct tax measures only to a limited extent) and the European Community (EC) treaty (which covers direct tax measures more broadly). Part two outlines the issues raised when tax matters are covered in non-tax treaties.

Foreign Direct Investment In Latin America Overview And Current Status, Reuven S. Avi-Yonah, Martin B. Tittle

Other Publications

More firms than ever, and in more industries and countries, are expanding abroad through [foreign] direct investment [FDI]. Although FDI in 1980 was equivalent to only 5% of world GDP, by the end of the 1990's, that percentage had more than tripled to 17%. In 1993, the total US dollar value of world FDI was only US$ 200 billion, but by the year 2000, it had risen to US$ 1.3 thousand billion. Developing countries received around 25% of these inflows, mostly in the form of "greenfield" investments, where a new enterprise is essentially created from scratch.

Ambiguity And Income Taxation, Terrence R. Chorvat

Cardozo Law Review

No abstract provided.

(How) Should Trade Agreements Deal With Income Tax Issues?, Joel Slemrod, Reuven S. Avi-Yonah

Articles

What is the relationship between the international tax regime, as embodied in bilateral international tax treaties, and multilateral free trade agreements like the General Agreement on Tariffs and Trade (GATr)?' Are their fundamental goals consistent or inconsistent? If they are inconsistent, should the tax treaties or the GATT be changed to remedy the inconsistency? If they are consistent, should the scope of either be expanded to include the other?

Restoring Politics To The Commerce Clause: The Case For Abandoning The Dormant Commerce Clause Prohibition Of Discriminatory Taxation, Edward A. Zelinsky

Articles

No abstract provided.