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Global Tax Governance. What’s wrong with it and how to fix it.

Book · January 2015with342 Reads
ISBN 978-1785521263
Authors and Editors
Abstract
Commercial banks such as UBS and HSBC embroiled in scandals that in some cases exposed lawmakers themselves as tax evaders, multinationals such as Google and Apple using the Double Irish and other tax avoidance strategies, governments granting fiscal sweetheart deals behind closed doors as in Luxembourg - the stream of news items documenting the crisis of global tax governance is not about to dry up. Much work has been done in individual disciplines on the phenomenon of tax competition that lies at the heart of this crisis. Yet, the combination of issues of democratic legitimacy, social justice, economic efficiency, and national sovereignty that tax competition raises clearly requires an interdisciplinary analysis. This book offers a rare example of this kind of work, bringing together experts from political science, philosophy, law, and economics whose contributions combine empirical analysis with normative and institutional proposals. It makes an important contribution to reforming international taxation.
Chapter One
Global Tax Governance: What It is
and Why It Matters
Peter Dietsch and Thomas Rixen
Until quite recently, a book with the title Global Tax Governance would have
been unthinkable. Most social scientists interested in the then already widely used
concept of global governance would have thought either that there is no such thing
as global governance in the area of taxation or that it is too rudimentary to warrant
any attention. This has changed.
Today, global tax governance is very high on the international and various
national political agendas. There are two main reasons for this. First, in the wake
of the 2008 nancial crisis, many states have seen their public debt rise to high
levels and, hence, can no longer afford to forgo tax revenues currently lost to
international tax evasion and avoidance. Second, political initiatives are fuelled by
recent tax scandals (such as Starbucks, Apple, Offshore Leaks and LuxLeaks) that
have raised public awareness and guaranteed media attention.
While these events have triggered a rare public debate on international
tax issues, the academic discussion, though still relatively young, goes back
a little further. Apart from isolated contributions (Picciotto 1992; Palan 1998),
issues of international taxation had hardly been dealt with in political science
and international political economy until around ten years ago, when a small
number of scholars began to address the issue (Sharman 2006; Rixen 2008;
Webb 2004). Since then, a sizeable literature has developed. A similar
situation pertains for normative political philosophy. While scal policy
is regarded as an important tool by contemporary theories of justice (for
example, Rawls 1999; Dworkin 2002), and while some work on the normative
foundations of taxation has emerged in recent years (Murphy and Nagel 2002;
Halliday 2013), normative work focused on the international dimensions of
scal policy has been almost completely absent (but see Cappelen 2001). In
recent years, however, a few contributions have emerged (Brock 2008; Dietsch
and Rixen 2014; Dietsch 2015; Gaisbauer, et al. 2015). This book aims to take
stock of the academic debate on global tax governance.
We are convinced that the recent interest in global tax governance is well
justied. Since taxation is the most direct interface between the market and
the state, it is the perfect policy area in which to observe the relation between,
and relative power of, the two spheres. Moreover, taxation represents one of
the core functions of the modern nation-state. Therefore, it should be key to an
understanding of how economic globalisation affects state sovereignty and the
choice and development of international institutions, as well as the effectiveness
2 Global Tax Governance
and legitimacy of both national and international institutions; these are, of course,
the major themes of the literature on global governance.
Politically, the governments and international institutions involved in designing
global tax governance claim that they are on track to tackle the problems created
by tax competition. Soon after the nancial crisis hit, the G20 and OECD revived
their ‘black’ and ‘grey’ lists of uncooperative tax havens and forced them to sign
bilateral tax information-exchange agreements (TIEAs). Recently, the OECD
has even forged an agreement that foresees multilateral automatic information-
exchange (AEI) as the new global norm. In addition, the G20 and the OECD are
taking steps to control the practices of base-erosion and prot-shifting (BEPS)
of multinational corporations.1 All that being said, most experts, while admitting
that these initiatives represent real progress, are less optimistic about their
effectiveness.
The contributions to this volume are directly relevant to this political debate.
They explain why current attempts to strengthen global tax governance are
insufcient; and they propose alternatives. More specically, this involves
(1) identifying the problems that globalisation creates in the area of taxation,
through tax competition in particular; (2) explaining the institutions, structures,
and processes of global tax governance as well as analysing their shortcomings;
(3) developing the normative foundations for an appropriate regulatory response
and building on these foundations; (4) deriving proposals for the reform of
institutions and policies.
This is an ambitious agenda that could not be addressed appropriately within
any single discipline. It requires a thorough understanding of the economics
of tax competition at the interface between markets and states; a grasp of the
complex and technical legal issues involved; awareness of the geopolitical and
social forces at work that might either foster or obstruct reform; and, nally,
a normative framework that allows one to weigh such competing values as
scal autonomy, distributive justice, and economic efciency. This is why
this volume brings together political scientists, lawyers, economists, and
political philosophers. Each contribution has a well-dened role in producing
a comprehensive assessment of the challenges facing global tax governance
today. Unique in this interdisciplinary focus, the book combines theoretical
and conceptual work with empirical analysis. One of the key motivations in
putting together this collection is the conviction that any approach to global tax
governance that is grounded in a single discipline is bound to omit important
considerations, and thus will most likely fail to provide sound analysis and
1. Under the current rules of international taxation, multinational enterprises have various
possibilities for shifting their prots (the tax base) to subsidiaries in low-tax countries and making
sure that actuarial losses are attributed to high-tax countries. This way, the enterprise arbitrages
across different tax systems in order to save taxes. The different techniques of achieving this and
what could be done to avoid this, will be explained in subsequent chapters (see e.g. Clausing
2016, Chapter Two; Eccleston and Smith 2016, Chapter Eight; Dietsch 2016, Chapter Eleven;
Avi-Yonah 2016, Chapter Thirteen; and Rixen 2016, Chapter Fifteen).
Introduction 3
policy advice. At the same time, the volume aims to provide a comprehensible
and accessible overview that may serve as an entry point to the eld for
non-specialists.
In this introduction we will rst dene global tax governance, briey situate it
in the two relevant but often separated bodies of literature on global governance
and taxation, and provide a sketch of its historical development as well as of
how current events t into this trajectory (Section 1). We then detail some of
the challenges that tax competition poses (for national and global governance),
notably concerning state sovereignty (Section 2) and in terms of rising inequalities
of income and wealth (Section 3). Section 4 contains an outline of the individual
contributions to the volume and of how they t together. We conclude with a
look at some of the lessons for global tax governance that we can draw from this
volume (Section 5).
1. What is global tax governance?
In the broadest sense, governance can be dened as the activity of ‘organizing
collective action’ (Prakash and Hart 1999: 2). It covers the creation or development
of institutions – dened as formal and informal principles, norms, rules, and
procedures – that structure individual and collective behaviour. Such governance
may be exercised by state and non-state, public and private actors. Governance is
global governance if the reach of the principles, norms, rules, and procedures is
global or at least international.2 Global tax governance thus consists of the set of
institutions governing issues of taxation that involve cross-border transactions or
have other international implications.3
This denition implies that global tax governance need not, but could, involve a
full or partial shift of the power to tax, that is, the right to impose taxes on citizens,
to the international level. Currently, the right to tax is rmly tied to the nation-
state. While global tax governance circumscribes and shapes a nation’s power to
tax in various ways, it exclusively consists of institutions governing the interaction
among national tax systems. Whether or not a shift of some or all dimensions
of a nation’s power to tax to the international level would be desirable is one of
the themes addressed by various contributions in this volume (see Ronzoni 2016,
Chapter Nine; Dietsch 2016, Chapter Eleven; Wollner 2016, Chapter Fourteen;
and Rixen 2016, Chapter Fifteen in this volume).
2. The reference to principles, norms, rules, and procedures relates to Keohane’s well known
denition of an international regime, an important concept in the literature on global governance
(Krasner 1982: 186). While the term ‘global’ suggests the full inclusion of all countries in the
world, in practice it is often used for any kind of international policy-making.
3. Global tax governance concerns direct and indirect taxation. Currently, most discussions of global
tax governance are limited to direct taxation. This is due to the fact that under current institutional
arrangements, international aspects of indirect taxes are addressed in the international trade
regime. This empirical fact does not imply that the tax-related aspects of international trade should
not be considered a part of global tax governance analytically. In this volume, Gabriel Wollner’s
proposal for a nancial transaction tax (2016, Chapter Fourteen) relates to indirect taxes.
4 Global Tax Governance
Global governance aims at the cooperative regulation of globalisation. The
basic assumption/insight is that in an age of globalisation, an ever-increasing
number of issues cannot be adequately governed within the nation-state. If societal
interactions cross borders and create interdependencies and externalities among
national societies and polities, there is a need for global governance (Dingwerth
and Pattberg 2006; Zürn 2013). This has been argued convincingly for policy
areas ranging from environmental protection, world trade, and nancial stability
to issues of health, human rights, and security (cf., for example, Kaul et al. 2003).
Until quite recently, this line of argument has been conspicuously absent in
taxation.
While globalisation and its effects have been a major research eld in the
scal context since at least the 1990s, the focus has been almost exclusively on
national political reactions. In taxation, globalisation has entered the debate as
tax competition, that is, national governments competing for mobile tax bases.
Political scientists and economists have asked: does tax competition lead to a race
to the bottom in terms of tax rates and, consequently, in terms of revenues and
public-goods provision? Does it constrain the political capacity to maintain the
welfare state? A set of inuential papers in political science has shown that tax
revenues in industrialised countries have remained constant and concluded that,
therefore, the autonomy of national tax and welfare state policy was still intact
(cf., for example, Swank and Steinmo 2002; Garrett and Mitchell 2001; Basinger
and Hallerberg 2004). Others, building on empirical ndings in economics
(Devereux and Grifth 2002; de Mooij and Ederveen 2008; see Clausing’s
overview 2016, Chapter Two in this volume), disagreed. They have argued that
the focus on tax revenues alone was misguided and masked important changes
in the structure of tax systems. In particular, they have made the case that tax
competition has undesirable distributive implications in developed countries
and leads to signicant revenue losses in the developing world (Genschel 2002;
Ganghof 2006; Rixen 2011b; see also Genschel and Seelkopf 2016, Chapter Three
in this volume). According to this view, tax competition seriously constrains the
autonomy of national policy.
Rather than reopening this important debate, which will be taken up in detail
by the three contributions in Part One of this volume, the relevant point for
the purpose of this introduction is that international political actions were not
considered by political scientists and economists. This overlooks two important
aspects. First, globalisation itself, including tax-base mobility, is a political
phenomenon, that is, it is the result of deliberate international cooperative
efforts to liberalise international trade and investment and reduce cross-
border tax distortions. It is a product of global governance. Second, national
adaptation to the pressures of tax competition is not the only possible reaction.
Governments could, in principle, react by establishing global governance
mechanisms, or by adapting existing ones, to rein in harmful tax competition.
For a long time, both aspects of global tax governance – the removal of tax
obstacles and regulating tax competition – were the almost exclusive territory
of international lawyers, who focused on explicating and interpreting the
Introduction 5
relevant legal rules (cf., for example, Graetz 2003).4 Meanwhile, the political
and economic determinants of global tax governance have received little or no
attention. It is only recently that political scientists, economists, and political
philosophers have taken up the issue. It is one major purpose of this volume to
present original contributions of scholars engaged in that enterprise.
The long-time neglect of global tax governance is all the more surprising as
the history of global tax governance goes back to the beginning of the twentieth
century and to the rst wave of globalisation that was comparable in magnitude
to the current one (Bordo et al. 1999). The original and initially sole purpose
of global tax governance was to mitigate international double taxation in order
to liberalise international trade and investment.5 In response to demands by the
International Chamber of Commerce (ICC), the League of Nations commissioned
several reports and convened meetings that ultimately resulted in a model
convention for bilateral double tax avoidance (DTA) treaties shortly before the
Second World War. In parallel to these developments, several countries began to
develop unilateral (domestic) laws on the taxation of cross-border activities and
also drafted bilateral tax treaties. After the war, this work on DTA was briey
taken up by the United Nations before it then migrated to the Organisation for
Economic Co-operation and Development (OECD), which continuously revised
and modernised the model convention. Over time, due to these multilateral
efforts, a remarkable homogeneity among national laws and bilateral treaties has
been achieved. Today, there are about 2500 DTAs (Rixen 2008; Genschel and
Rixen 2015).
As intended, the abolition of capital controls enabled increased capital
mobility and the effective removal of tax obstacles through DTAs has increased
the potential scal advantages of moving capital across borders. In this sense,
globalisation in general is a political phenomenon and tax-base mobility,
in particular, is the result of global tax governance. However, the specic
principles and rules chosen to avoid double taxation had an unintended, albeit
foreseeable, consequence. They caused the related phenomena of tax evasion
and avoidance as well as of tax competition. DTA treaties aim at disentangling
the transnational tax base and assigning it to different jurisdictions. Once
the jurisdiction to tax has been established, a country is then free to apply
its own national tax law to its share of the income. DTA rests on the mere
interface-regulation of autonomous national tax systems, and governments
retain almost unlimited sovereignty over their share of the transnational tax
4. A few studies from lawyers took a broader perspective and presented more political and historical
analyses of the development of international taxation (e.g. Picciotto 1992; Avi-Yonah 2000) or
presented analyses of the dysfunctionalities of the system (e.g. Bird 1988; Dagan 2000).
5. Double taxation stems from an overlap of jurisdiction to tax between the country in which a
taxpayer lives (residence state) and the country where the taxpayer’s income is generated
(source state). If both countries exert to the full their power to tax, then the tax burden for
international investments is higher than for national investments, causing an inefcient allocation
of capital. In order to prevent this, governments engage in efforts to avoid double taxation.
6 Global Tax Governance
base (Bird and Wilkie 2000: 91–5; Vann 1991: 102). Governments are free
to underbid each other in tax rates and other relevant legislation in order to
attract a larger part of the transnational tax base. This is the supply side of tax
competition. On the demand side, taxpayers exploit the resulting differences
in national tax systems and engage in prot-shifting and tax arbitrage, which
are to a large extent, made possible by the particular legal constructs on which
DTA treaties rely. In other words, the rules of DTA endogenously create tax
avoidance and tax competition. Most prominently, the principle of ‘separate
entity accounting’ and the ‘arm’s length standard’ (ALS) facilitate various
kinds of thin capitalisation and transfer-pricing manipulations, two of the
techniques used to shift prots to low-tax countries and erode tax bases in high-
tax countries (see Clausing 2016, Chapter Two and Avi-Yonah 2016, Chapter
Thirteen in this volume). The sovereignty-preserving approach to the global
governance of DTA provided the institutional foundation of tax competition
(Rixen 2011a).
In the 1960s, many countries reacted to the problem of tax arbitrage. Following
the example of the US, they began to incorporate anti-avoidance legislation in
their unilateral (domestic) tax laws. The OECD participated in those efforts
by trying to promote the diffusion of such legislation across its member
countries. From the late 1990s it became increasingly clear that such unilateral
approaches were insufcient to solve the problem. In 1998, the OECD launched
its project on harmful tax competition (OECD 1998). Likewise, the EU started
initiatives such as the code of conduct on business taxation (Radaelli 2003) and the
Savings Tax Directive (Rixen and Schwarz 2012; Hakelberg 2014) to formulate
an international answer to the problem of tax competition. While the avoidance
of double taxation continues to be a topic of global tax governance, the focus
has clearly shifted to tax competition. The present volume focuses mostly on
this issue and on developments since the late 1990s. Since, as explained above,
DTA and tax competition are intimately connected, the institutions of DTA
are nonetheless part of the analysis (see, for example, the contributions by
Dietsch 2016, Chapter Eleven; Avi-Yonah 2016, Chapter Thirteen; and Rixen
2016, Chapter Fifteen).
Without anticipating too much, the trajectory of global tax governance can
broadly be understood as an incomplete adaptation of the governance structure
to the fundamentally altered international tax game. In the rst period of global
tax governance, when governments were mostly interested in liberalisation,
a bilateral approach – supported by the OECD through its dissemination of
information and shared practices that all states have an interest in following –
was appropriate to accommodate countries’ preferences. In a nutshell: since
DTA is a coordination game with a distributive conict, the institutions
needed to deal with this problem do not have to be equipped with enforcement
capabilities. The soft governance mechanisms used by the OECD – non-binding
recommendations, providing technical expertise, diffusion by collecting
best-practice examples and so on – were adequate. In contrast, the issue of
tax competition exhibits the institutionally more demanding structure of an
Introduction 7
asymmetric prisoner’s dilemma.6 This strategic structure would require a shift to
hard and multilateral governance with independent international enforcement.
While current events may be interpreted as struggles to react to the functional
demands of this strategic structure, the required shift is not forthcoming. In
part, this is due to the fact that global tax governance exhibits signicant path-
dependence (Rixen 2011a; Eccleston 2012).
Three key observations can be made about the current institutional trajectory.
First, while it is true that there is a move towards multilateralism in the ght
against tax evasion, it is not fully global and inclusive of all states. For example,
the recent agreement on automatic exchange of tax information (OECD 2014),
which is an important step forward, was signed by a mere fty-one countries. The
fact that the membership of the OECD consists only of developed countries may
be part of the problem here, if the signatory OECD countries do not succeed in
getting developing countries on board. Second, while major economic powers are
increasingly willing to exert pressure on tax havens, they still rely on informal
instruments such as naming and shaming (see Woodward 2016, Chapter Five in
this volume) or, less often but the US Foreign Account Tax Compliance Act
(FATCA), under which foreign banks are required to disclose their US clients
to the US tax administration, is an example – on blunt power politics (see the
contributions by Hakelberg 2016, Chapter Six in this volume; and Grinberg
2016, Chapter Seven in this volume). So far, there has not been any attempt to
institutionalise formal enforcement mechanisms. Third, it is true that states are
increasingly willing to engage in administrative co-operation and information-
exchange with other governments. However, they are hardly willing to delegate
or pool their legislative sovereignty, that is, the authority to make national tax
policy. While this would not be a problem as long as the particular issue could be
effectively addressed by administrative co-operation, there are strong indications
that the effective regulation of BEPS requires a sharing of legislative sovereignty,
that is, the partial harmonisation of national tax laws (see Eccleston and Smith 2016,
Chapter Eight in this volume).
In summary, global tax governance historically played an important role in
creating the problem of tax competition but also holds the promise of providing a
solution, albeit one it has not yet delivered. Thus, it is a signicant phenomenon
that warrants more attention than it has traditionally received in the social sciences.
6. An asymmetric prisoner’s dilemma is characterised by the following strategic structure: one
party (tax haven) has deadlock preferences, i.e. it not only prefers defection over co-operation
in individual strategies but also prefers the outcome of collective defection over the outcome
of collective co-operation. The other party (big, developed country) has prisoner’s dilemma
preferences, i.e. while it prefers defection over co-operation in individual strategies it prefers the
outcome of collective co-operation over that of collective defection. The game is thus different
from the regular (symmetric) prisoner’s dilemma, in which the cooperative outcome is preferred
by both parties over the uncooperative outcome. Nevertheless, in the asymmetric game, the
cooperative and Pareto-optimal outcome could be achieved if, in game-theoretical parlance, big
countries offered side-payments to tax havens. For a detailed derivation of the strategic structure,
see Rixen (2008: 43–8). See also the contributions by Genschel and Seelkopf 2016, Chapter
Three; and Hakelberg 2016, Chapter Six in this volume.
8 Global Tax Governance
Before we turn to the empirical and normative analysis of global tax governance
that is the central task of this book, we rst need to explain why tax competition is
indeed a problem. We turn to this in the following two sections.
2. Tax competition, democracy and state sovereignty
Who decides what and how to tax, and for whose benet? Tax competition
introduces an important bias into the way national scal systems respond to these
questions. First, tax competition undermines the capacity of polities to choose
the size of their public budget as well as the level of redistribution, because it
compromises their ability to tax capital. Under conditions of capital mobility,
attempts to tax capital will usually trigger capital ight and thus prove futile.
Second, this inability to tax capital effectively means that the ‘haves’ are likely to
enjoy a lighter tax burden compared to the ‘have-nots’, for the simple reason that
capital-ownership tends to be concentrated among the former. This section looks
at the effect of tax competition on democratic decision-making; the next section
focuses on the link to inequality.
The idea that the dynamics of economic globalisation constrain the room
for manoeuvre of national economic policies is neither new nor limited to scal
policy. One poignant way to capture this phenomenon has been formulated by
Dani Rodrik in what he calls the ‘political trilemma of the world economy’
(Rodrik 2011: 372). The basic idea is that we cannot simultaneously have
democratic politics, the nation-state as the primary locus of political control, and
hyper-globalisation, which includes the unrestricted movement of capital. Rodrik
uses corporate tax competition as one of the case studies to illustrate his trilemma
(Rodrik 2011: 357–60).
In response to the trilemma, so Rodrik claims, we have three options. We
can compromise democracy; we can curtail the power of the nation-state by
enhancing global institutions; or we might reverse some of the deregulation that
has led to hyper-globalisation. Compromising democracy is clearly undesirable
but note that, under the status quo, this is precisely what is happening. As
highlighted by Streeck (2014), the frequent political appeal to TINA (‘there is
no alternative’) policies illustrates the diminishing leverage that democratic
preferences have over global economic pressures. As a consequence, national
politics is increasingly emptied of its democratic substance (Crouch 2004;
Mair 2013). By comparison, the two other routes out of the trilemma are more
attractive. In the scal context, to put it simply, this confronts us with a choice
between limiting the mobility of capital on the one hand and, through global tax
governance, boosting the capacity of states to tax mobile capital on the other.7
This choice is by no means a binary one: combinations of the two are possible.
7. While several commentators, including Rodrik (2011), Streeck (2014) and Mair (2013), appear
to favour regulating the forces at work in globalisation over developing institutions of global
governance, the contributions to this volume are open to both approaches.
Introduction 9
Which combination should we choose? What are the relative advantages and
potential drawbacks of either approach? By answering these questions, this
volume wants to make a contribution to plotting our way out of the political
trilemma of the world economy.
Such projects of re-embedding the market are not utopian but already inform
policy-making today. The OECD and the European Union issued the European
Savings Tax Directive and started their respective initiatives on eliminating
harmful tax competition as well as on working towards a consolidated corporate
tax-base well before the nancial crisis. The events of 2008 and the years since
have added to the urgency of these projects. While the nancial crisis was not
caused by tax competition, one can argue that the latter had an exacerbating
effect: it meant that a number of nancial risks were hidden offshore (Rixen
2013); moreover, it largely blocks the option of taxing accumulated corporate
prots in order to reduce public decits. One of the dangers today, which has
been borne out by the response to the crisis thus far, is that governments take the
inability to tax mobile capital as a parameter rather than as a policy variable they
can inuence. This is not the place to assess the merits of austerity as a response
to the crisis8 but, at the very least, complementing austerity with measures to
ensure the effective taxation of capital seems like a promising idea. The nancial
crisis has opened a window of opportunity in this regard. This volume aims to
contribute to the debate on how we should go about seizing this opportunity.
3. Tax competition and rising inequalities
One of the democratic decisions undermined by tax competition concerns the level
of redistribution among the members of a polity. When it is hard to tax capital
effectively, redistribution becomes more difcult. As Piketty and his collaborators
have shown, there is a strong and signicant positive correlation between the
decrease in tax rates and the increase in inequality of income and wealth. Those
countries with the biggest fall in the top rates of their income-tax schedule
experienced the strongest increase in the share of income going to the richest
10 per cent. Likewise, the increase in capital concentration is largely driven by
reductions of the capital (income) tax. As Piketty points out, the reforms to lower
tax rates occurred in all developed countries over the last two to three decades and
were to a signicant extent driven by the pressures of tax competition (Piketty
2014; Piketty et al. 2011).9
8. For a critical assessment, see Blyth 2013.
9. It is worth noting that before Piketty, economic analyses of tax competition tended to neglect
its distributive implications. The standard economic models focus on the criterion of economic
efciency to assess the effects of tax competition (for overviews, see Wilson and Wildasin 2004;
Genschel and Schwarz 2011; and Clausing 2016, Chapter Two in this volume). One notable
exception in this context is Sinn’s selection principle, which not only states that competition
between states will be inefcient but also underscores the link between tax competition and
inequality (Sinn 2003: 60).
10 Global Tax Governance
A political consensus has been forming that inequality needs to be reined in,
but how? Piketty plausibly argues that any reversal of the trend of rising inequality
will have to involve the return to a more progressive income-tax schedule. He
states that ‘the optimal top tax rate in developed countries is probably above
80 per cent’, but emphasises at the same time that, in the US for example, ‘taxes
would also have to be raised on incomes lower in the distribution (for example,
by imposing rates of 50 or 60 per cent on incomes above $200,000)’ (Piketty
2014: 512–13) in order to have a signicant impact on revenue. As he admits, only
if tax competition is effectively curbed or at least dampened will nation-states
actually have the required policy autonomy (sovereignty) to pass and implement
such legislation effectively.
With regard to wealth inequalities, while he discusses the introduction of a
global wealth tax, he is silent on other measures of tax co-operation. In particular,
the return to higher income-tax rates and higher tax rates on capital will depend on
an effective solution to the problems of tax evasion or tax avoidance through capital
ight. Among other things, such as multilateral automatic information-exchange
(which he briey mentions in his proposal for a global register of wealth) and a
general push for more transparency, any solution will have to be sensitive to the
fact that corporate taxation acts as a backstop for income taxation (Ganghof 2006;
see also Clausing 2016, Chapter Two in this volume). In this book, we provide a
comprehensive treatment of the kind of tax co-operation required to make reforms
à la Piketty possible.
In sum, tax competition tends to exacerbate inequalities in income and
wealth. Conversely, global tax governance is a crucial element in the ght against
increasing inequalities, which many policy-makers and experts have identied as
a serious threat not only to economic stability and growth (for example, Ostry
et al. 2014) but also to democracy (for example, Schäfer 2013; Stiglitz 2008). This
last point establishes a link to the previous section. Tax competition, in addition
to directly undermining the scal sovereignty of states in terms of their ability to
tax capital, risks having a second, indirect negative impact on democracy once
inequalities attain levels that bias the democratic process in favour of the rich.
4. Structure and content of the volume
The logic behind the structure of the volume is the following: Part One presents
a diagnosis of the problematic aspects of international tax competition. The
contributions to Part Two put forward an assessment of where current attempts to
address these problems fall short. Part Three discusses the normative principles
that a coherent and feasible political response to tax competition should be
based on. Finally, the contributions to Part Four detail several of the institutional
arrangements that are necessary to regulate tax competition in practice.
The three chapters that make up the rst part of the book explain how tax
competition works and what its consequences are. First, Kimberly Clausing
presents an overview of the major empirical ndings on the economics of tax
competition (Chapter Two). She focuses on mobile multinational enterprises
Introduction 11
(MNEs) and shows that these are tax-sensitive in their business decisions. In
particular, referring to data on the micro- and macro-level, she shows that ‘virtual’
tax competition is much ercer than ‘real’ tax competition. While MNEs tend to
seek low-tax environments for their real economic activities, they are far more tax-
sensitive when it comes to (paper) prots, the location of which can be manipulated
through their nancial arrangements. This implies that tax competition is unlikely
to be a drag on growth in capital-rich countries (as aggregate capital stocks are
hardly affected), yet it does adversely affect tax revenues and leads to a lighter tax
burden on corporate income. This has regressive distributive implications in itself
but Clausing explains that these are further amplied by the fact that an erosion of
the corporate tax endangers the integrity of the larger income-tax system. Overall,
the empirical evidence supports the notion that curbing tax competition would
entail substantial welfare gains.
In Chapter Three, Philipp Genschel and Laura Seelkopf take up this nding
and inquire why, given these potential welfare gains, tax competition persists.
They take a political-economy perspective and ask who are the winners and
losers from tax competition. They rene the conventional view, according
to which workers lose and capital wins everywhere. Using the insights of a
model of asymmetric tax competition (Bucovetsky 1991) and differentiating
countries with respect to regime type (democracy versus autocracy), they show
that in addition to capital (in all countries), the winners from tax competition
include the governments and workers of small, well governed democracies. The
losers are governments and workers of large countries, of less developed ones
in particular, which are more likely to be autocratic and poorly governed. In
contrast, large democratic countries can at least maintain large welfare states.
However, since the latter are increasingly nanced via debt and taxes on labour
and consumption, workers in these countries also lose. Irrespective of these
distributive implications, tax competition remains a negative-sum game: big
countries lose more than small countries gain.
One implication of this is that the collective-action problem inherent in
overcoming tax competition is worse than the conventional view suggests. If
workers were the losers everywhere, and assuming that the median voter typically
receives the large majority of her income from work, then all governments, at
least in well functioning democracies, should be in favour of international tax
co-operation. But since governments and workers in small countries prot, there
is typically a political conict of interest between big-country governments
and small, tax-haven governments, which has become very obvious in recent
campaigns for tax co-operation.
Nevertheless, if all the losers from tax competition identied by Genschel and
Seelkopf are aware of being short-changed, does it not seem puzzling that they do not
manage to overcome the collective-action problem of regulating tax competition,
even in the face of resistance from tax havens? In Chapter Four, Lyne Latulippe
offers a solution to this puzzle. She argues that countries internalise the logic of
tax competition in their domestic policy-making, by adopting a competitiveness
discourse that reinforces tax competition. To support her argument, Latulippe
12 Global Tax Governance
looks at consultation processes on international tax policy in Australia in 2002
and in Canada in 2008. Both episodes illustrate how, by blurring the line between
corporate and national interests, the notion of competitiveness has emerged as
a policy goal. While the Australian and Canadian consultation processes were
formally open in terms of both the experts who headed the process and those
who participated by submitting opinions, corporate interests were dominant, thus
introducing a bias into the recommended policy options. This account implies that
to the extent that developed democracies are susceptible to interest-group biases –
and thus less responsive to the demands of the median voter than Genschel and
Seelkopf assume – tax competition is even more likely to be a stable political
equilibrium. Latulippe’s analysis allows us to gain a better understanding of
the way, and the extent to which, domestic interest-group inuence undermines
multilateral efforts towards scal co-operation; and to appreciate just how resilient
a phenomenon tax competition is.
Building on this understanding of the economics and politics of tax competition,
the contributions to Part Two analyse the current political responses to tax
competition. When you x a problem, you want to know whether the x works.
In Chapter Five, Richard Woodward argues that the lack of this ability is one
of the biggest shortcomings of recent initiatives in international taxation. Given
that offshore nancial centres (OFCs) have repeatedly been in the line of re of
international institutions rst in the 1990s and then again in the wake of the
nancial crisis of 2008 – how come they are still doing so well? Woodward claims
that one explanation thus far neglected in the literature is that OFCs successfully
feign compliance with new international standards while not actually changing
their ways. Such behaviour, dubbed ‘mock compliance’ by Walter (2008) and
Woodward, occurs when compliance costs would be high and when it is difcult
for others to detect non-compliance. Woodward argues that mock compliance is
the preferred strategy of tax-haven governments, rst, because they cannot afford
to remain openly non-compliant due to reputational risk and the greater power of
large OECD states and, second, because full compliance would cause trouble with
powerful domestic business interests. Woodward presents evidence that mock
compliance poses a serious problem for both past and present OECD initiatives,
especially when it comes to the implementation of recent TIEAs but also with
regard to the 2014 Declaration on Automatic Exchange of Information in Tax
Matters.
Lukas Hakelberg (2016, Chapter Six) takes a close look at the recent move
towards multilateral automatic information-exchange. He asks why this
breakthrough was possible after decades of failed attempts at international tax
co-operation and argues that political-science theories conceptualising international
co-operation as a Pareto-improving response to market failure cannot account for
this outcome, because we should then see joint gains for all countries involved.
However, as explained by Genschel and Seelkopf, some tax havens are clearly
worse off under the new regime. The missing piece of the puzzle of this outcome
of ‘redistributive co-operation’ (Oatley and Nabors 1998), according to Hakelberg,
is power. In this power-play, the US as the dominant nancial centre in the world
Introduction 13
played a crucial but very ambiguous role. At rst, the US used its nancial power
(measured as nancial market share) to pass a unilateral, extra-territorial law that
required all banks in the world to report the foreign income held by US citizens to
the US government. As Hakelberg shows, this law unlocked the stalemate in the
EU on automatic information-exchange and signicantly contributed to the move
towards AEI in the OECD. While this development may appear as an instance
of ‘benevolent hegemony’ (cf. Kindleberger 1976; Keohane 1984), the US itself,
having pressured other countries into co-operation, did not sign the OECD
Declaration of AEI thus acting as a ‘malign hegemon’, positioning itself as a
haven for unreported capital.
Whereas Hakelberg focuses on the origins of automatic information-exchange,
Itai Grinberg is interested in its implications for the future development of global
tax governance. In Chapter Seven, he asks under what circumstances unilateral tax
reforms can trigger wider multilateral tax co-operation. After the US adopted FATCA
in 2010, the compliance issues raised by this legislation for nancial institutions
triggered a negotiation with ve large European countries and, ultimately, paved
the way for the Common Reporting Standard that forms the centrepiece of the
OECD’s new model of automatic information-exchange. Grinberg analyses the
enabling factors behind this agreement and asks whether this sequence of events – a
bold unilateral initiative leading to multilateral reform – could represent a blueprint
for other areas of international taxation. He argues that one of the crucial elements
facilitating the trajectory from FATCA to multilateral agreement was the alignment
of interests among the large OECD members who pushed this agenda: individual
tax evasion hurts them all. By contrast, when considering whether the problem of
base-erosion and prot-shifting (BEPS) could be tackled in a similar way, Grinberg
is pessimistic because the allocation of corporate tax base represents an essentially
distributive problem, thus making consensus less likely.
Richard Eccleston and Helen Smith (2016, Chapter Eight) continue the analysis
on exactly this issue: BEPS. Building on the distinction between information-
exchange and tax competition, they provide an analysis of the role of the G20 in
post-crisis international taxation. They argue that given the non-binding character
of OECD recommendations, endorsement by the G20 is vital. It provides the
OECD’s policies with the necessary political clout and thus enhances compliance.
G20 support has played this role in the ght for information-exchange, which
is relatively uncontroversial as it is designed to counteract illegal tax evasion.
But it may not sufce in the ght against the aggressive tax-planning practices of
multinational corporations. To date, these practices have been legal, and measures
against them require limits on a state’s sovereign right to tax. As Eccleston and
Smith point out, the issue also involves more serious conicts of interest among
the powerful G20 and OECD members. Consequently, the authors are pessimistic
both about the scope and substance of the BEPS action plan and about the general
prospects for compliance with the BEPS initiative.
The remaining contributions to the volume develop normative principles
(Part Three) and make concrete reform proposals (Part Four). The chapters
in Part Three address the following question: what are the normative criteria
14 Global Tax Governance
we should appeal to in order to assess the practice of tax competition? In
Chapter Nine, Miriam Ronzoni analyses tax competition through the lens of
the two dominant families of contemporary theories of global justice (Barry
and Valentini 2009). She argues that it is not only cosmopolitans (because
they start from the premise of the equal moral status of all individuals around
the globe) who have reasons to condemn tax competition; perhaps more
surprisingly, internationalists, who accord substantive autonomy to national
political communities, should do the same, because tax competition risks
undermining this autonomy. Ronzoni thus defends the idea that we should
condemn tax competition independently of which of these theories of justice
we hold. Subsequently, focusing on the internationalist position, she asks
what a regulation of tax competition along internationalist lines would entail.
She argues that it would include three elements, namely, some taxation at the
supranational level; the adoption of minimum tax-rates across states; and the
creation of international institutions with the mandate and capacity to enforce
tax standards.
Laurens van Apeldoorn, in Chapter Ten, discusses the contours of a modern
understanding of the idea of scal sovereignty. He critically discusses recent
attempts to dene this sovereignty in a way that extends, at least to some extent,
to the protection of the effectiveness of scal policy (Dietsch and Rixen 2014;
Ronzoni 2016, Chapter Nine in this volume). While these accounts maintain
that the mobility of tax-bases constitutes a variable that polities, at least to some
extent, should be able to control, van Apeldoorn defends the idea that capital
outows in reaction to tax incentives elsewhere should be viewed as a parameter
of national tax policies. As a result, his conception of scal sovereignty is
substantially thinner than those of the accounts he criticises – Dietsch takes
up this challenge explicitly in the subsequent chapter. The robust core of scal
sovereignty that van Apeldoorn recognises is based on the idea that sovereignty,
in the sense of domestic authority and control, is potentially subject to erosion.
On the one hand, a state can be said to lose control when aspects of (scal)
regulation are not respected by the citizenry and, on the other hand and perhaps
more problematically, a state can be said to lose legitimacy when its regulations
do not reect democratic preferences. The latter scenario corresponds to the
corporate capture of the legislature by vested interests as, for instance, in the US
states of New Jersey and Delaware (Palan et al. 2010: 109–11).
In the nal contribution to Part Three, Peter Dietsch (2016, Chapter Eleven)
distinguishes between virtual and real tax competition; he makes the case that
our response from an ethical and political point of view needs to track this
distinction. The rst, virtual type refers to cases where tax bases are mobile
even though their owners stay put – think of the German citizen who does not
declare capital gains in a Swiss bank account or of multinationals like Google
or Volkswagen who generate a lot of income in France but book their prots
in Bermuda or Luxembourg. From a legal perspective, there is a difference
between these two cases – the rst is considered evasion and illegal whilst the
second constitutes legal tax avoidance – but from an ethical perspective, there
Introduction 15
is no difference between the two. Dietsch argues that the case for banning this
type of activity, which has been called ‘poaching’ by the OECD, is strong. The
second, real type of tax competition is more akin to a form of ‘luring’. Here, the
owner of the capital in question responds to tax incentives by actually relocating
elsewhere, for instance, through foreign direct investment (FDI) in a low-tax
jurisdiction. Dietsch points out that these cases are more complex from an ethical
perspective. Instead of defending one specic normative response to them, he
outlines a menu of positions one might defend, depending on one’s conception
of scal autonomy.
The nal part of the volume turns to concrete reform proposals. In Chapter
Twelve, Markus Meinzer, who is not only an academic but also a tax-justice
activist, argues that political initiatives to counter tax havens at national and
international levels have, typically, relied on arbitrary and doubtful criteria for
what constitutes a tax haven. This arbitrariness is one important factor behind the
failure of past and most current attempts to counter harmful tax competition. In
contrast, Meinzer proposes to rely on the Financial Secrecy Index (FSI), which
shifts the focus away from tax aspects on to secrecy, using transparent, veriable
criteria and data sources. The index assesses the degree to which a jurisdiction’s
legal and regulatory system contributes to global nancial secrecy and thus
facilitates corrupt practices, including those stemming from tax-abuse. The FSI,
Meinzer claims, can help to shape reforms in three main ways. First, the high
ranking of major OECD powers in the index (that is, their lack of transparency)
underlines their need to lead through example, by enacting domestic policy
reforms, before imposing changes on others. Second, once these reforms are
implemented, a broad menu of specically designed counter-measures can be
adopted, targeting aspects of the nancial secrecy of all jurisdictions. Third, by
focusing on transparency as an intermediate step to achieving fair international
tax rules, more sustained public support for reform efforts against the resistance
of vested interests is likely to emerge.
In Chapter Thirteen, Reuven Avi-Yonah argues for the introduction of a
system of unitary taxation and formula apportionment (UT+FA). He explains
why the current system of arm’s-length standard (ALS) transfer-pricing does
not work properly. Among other problems, it is overly complex and allows
corporations to engage in prot-shifting to avoid paying taxes. According to
Avi-Yonah, the best alternative would be the introduction of full-scale UT+FA.
Under such a system, corporations would have to issue a combined report on
their global prots, which would then be attributed to the different jurisdictions
in which the MNE is active according to a formula that relies on indicators of
real economic activity, such as the number of jobs, sales, or assets in a country.
He discusses a number of objections raised against UT+FA and comes to the
conclusion that they can all be defeated. However, given erce resistance from
the OECD and many governments, he acknowledges that full-scale UT+FA
is currently unfeasible (at least as long as the EU does not move forward to
introduce such a system, which is referred to as the Common Consolidated
Corporate Tax Base (CCCTB) by the EU). Consequently, he argues for an
16 Global Tax Governance
intermediate step that would use formula apportionment only in those cases
where the OECD guidelines currently foresee the use of prot-split methods.
These are cases where it is particularly difcult to determine ALS prices in the
traditional manner and which are therefore already resolved by reference to the
prots realised in different countries.
Gabriel Wollner (2016, Chapter Fourteen) analyses the role that an international
nancial transaction tax (IFTT) could play in the institutional arrangements of
global tax governance. He presents two families of arguments that have been
mobilised in favour of such a tax. First, what one might call an internal argument
(James 2012: 144), namely, Tobin’s idea that sand needs to be thrown into the
wheels of nance in order to reduce the risk of nancial instability. From this
perspective, an IFTT would ensure that the risk-externalities of transactions are
internalised and that those who benet from the public good of a well functioning
nancial system contribute to its maintenance. As to the second, external argument,
an IFTT represents an important means of promoting distributive justice. Its
progressive features on the revenue side, as well as the fact that it represents an
important potential source of expenditure targeted at reducing poverty, make it
an attractive policy option. Finally, Wollner argues that an IFTT would promote
global background justice by shoring up the effective sovereignty of states over
their economic fate, for instance by increasing the transaction costs of tax arbitrage
and other practices that undermine this sovereignty.
Finally, in Chapter Fifteen, Thomas Rixen proposes an International Tax
Organisation (ITO). This new organisation would be responsible for the international
governance of direct taxation. Rixen engages in an exercise of positively informed
normative institutional design that builds on two considerations: rst, an analysis
of the functional requirements of the institution – what kind of collective
rules are required to defeat individual states’ incentives to engage in harmful,
competitive behaviour? And second, which rules help to safeguard national de
facto tax sovereignty? The answers to these two questions provide the design of
the institution (and its policies), which are spelled out in detail in the chapter. The
design features turn out to be similar to those of the World Trade Organization
(WTO). The ITO would, for one, function as a multilateral forum for governments
to negotiate the concrete rules, thus replacing the mode of bilateralism and
increasingly (partial) clubs so far prevalent in international taxation. Second, and
even more importantly, it should entail a legalised dispute-settlement procedure
very similar to that of the WTO, in which countries can be forced to abandon tax
policies that constitute harmful tax competition.
5. Theoretical and political implications
The subtitle of this volume asks a double question about global tax governance:
what is wrong with it and how to x it? In this nal section, we pull together some
of the main insights the contributing chapters offer to answer these questions.
In doing so, we follow the logic of the four parts to the book.
Introduction 17
A precise diagnosis is a precondition for any cure. The contributions to Part
One offer a sophisticated understanding of the phenomenon of tax competition
and the challenges it presents. It is worth highlighting three of them here.
First, consider the relative importance of virtual versus real tax competition.
While Clausing 2016 (Chapter Two) rightly points out that today, poaching
through virtual tax competition is the dominant form of tax competition, a
ban on this kind of activity would substantially increase the incentives of
corporations to actually shift their economic activities to low-tax jurisdictions.
Reform efforts will have to be alert to this substitutive relationship. Second,
both the status quo of tax competition and potential reforms come with
distributive implications. Genschel and Seelkopf (2016, Chapter Three in
this volume) identify the winners and losers of tax competition and notably
dispel the idea that all members of a state share the same interests in a context
of tax competition. Especially in large countries, workers and governments
tend to lose from tax competition. Even within the corporate sector gains and
losses differ: on the one hand, multinationals benet from being able to play
different jurisdictions off against each other but, on the other hand, small and
medium-size enterprises’ ability to avoid paying taxes is much more limited.
Third, as highlighted by Latulippe (2016, Chapter Four in this volume), one
of the principal difculties of forming a coalition among the losers of tax
competition is the extent to which the competitiveness discourse has led to
an internalisation of the idea that competing on taxes is in the public interest.
Building on this analysis, the contributions to Part Two point to areas in
which regulation needs to do better than today. The common nding of these
chapters is that international taxation, an area that only ten years ago was
governed by an administrative and technocratic logic, has clearly developed
into a salient issue that is on the radar of IGOs, governments, parliaments,
and civil-society activists. The process of international tax policy-making
has been politicised. In terms of policy outputs, the chapters also agree: the
recent initiatives represent an astonishing development and signicant progress
when measured against the long-term historical trajectory of international
taxation; they do, however, fall short when measured against what would be
needed to regulate international tax competition effectively. One obstacle is the
phenomenon of mock compliance in the context of initiatives on transparency
and information-exchange, as discussed by Woodward in Chapter Five. Also,
as argued by Hakelberg in Chapter Six, leadership by the United States in
promoting automatic exchange of tax information has not been driven by
benevolent motives but rather by the desire to redistribute to its own advantage.
Another obstacle lies in the distinctive challenge posed by BEPS. While both
tax evasion and tax avoidance through BEPS represent types of ‘poaching’ and
are thus equally problematic from an ethical standpoint, Chapters Seven and
Eight, by Grinberg and Eccleston and Smith, both underline the importance
of distributive conict in any regulation of BEPS. Whereas it has been
relatively straightforward to form a coalition against individual tax evasion,
18 Global Tax Governance
the conguration of winners and losers in the case of corporate tax avoidance
makes it harder to nd a consensus on reform.
One of the contributions of this volume is to underscore the importance
of a sound normative justication for global tax governance. The chapters
in Part Three illustrate the kinds of arguments that are necessary to arrive at
such a justication. First of all, we need a more nuanced understanding of
such concepts as efciency, sovereignty or scal autonomy, and distributive
justice, which are frequently invoked in the debate on global tax governance.
For instance, Chapters Nine through Eleven agree that tax co-operation can,
in fact, be sovereignty-enhancing rather than sovereignty-compromising. That
said, they vary in the robustness of the concept of sovereignty they adopt and
thus also in the intensity of tax co-operation they advocate. Second, normative
justication requires value judgements about the relative weight we should
attach to the kinds of concepts listed above. For example, the extent to which
one’s regulatory response to tax competition includes the levying of some global
taxes – see Ronzoni (2016, Chapter Nine) – plausibly depends on the relative
weight one attaches to distributive considerations relative to sovereignty or
efciency. Likewise, as both van Apeldoorn (2016, Chapter Ten) and Dietsch
(2016, Chapter Eleven) emphasise, the normative stance we adopt towards the
luring of tax-base depends both on our understanding of scal autonomy and on
its weight relative to other values.
Finally, when it comes to concrete reforms that ow from the arguments
in this volume, Part Four offers a number of valuable lessons. First, a general
precondition for a paradigm shift on global tax governance, as emphasised
by Markus Meinzer (2016, Chapter Twelve), is the development of new and
more appropriate measures to combat tax-abuse, secrecy and other problematic
features of global tax governance. Second, as underlined in Avi-Yonah’s (2016,
Chapter Thirteen) defence of UT+FA, one of the critical drawbacks of the
current OECD’s efforts to ‘repair’ the arms-length standard (OECD 2013) lies
in the fact that this perpetuates the ‘cat-and-mouse’ game between regulators
and the tax-avoidance industry – one in which regulators always seem to be
one step behind. Effective reform such as UT+FA has the potential to overcome
these dynamics. The last two chapters of the volume sketch two complementary
paths to reform. Wollner’s (2016, Chapter Fourteen) case for an IFTT amounts
to slowing down tax competition by making tax-avoidance strategies less
protable. Rixen (2016, Chapter Fifteen) more ambitiously calls for the creation
of an ITO to oversee and enforce the regulation of the various forms of tax
competition. Given the arguments throughout the volume with respect to the
nature of tax competition as well as concerning the blind spots of the current
regulatory response, this call for an international organisation is a logical
conclusion. It is hard to see how anything short of an ITO could satisfy the
functional requirements of global tax governance today.
Introduction 19
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Global Tax Governance
What is wrong with it and how to x it
Edited by
Peter Dietsch and Thomas Rixen
© Peter Dietsch and Thomas Rixen 2016
Cover © Estate Werner Hartmann
Installation ‘New York’ by Werner Hartmann (1945–1993)
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Table of Contents
List of Figures and Tables vii
List of Abbreviations ix
Contributors xiii
Acknowledgements xvii
Chapter One – Global Tax Governance: What It is and Why It Matters 1
Peter Dietsch and Thomas Rixen
PART ONE – THE PROBLEM: INTERNATIONAL
TAX COMPETITION 25
Chapter Two – The Nature and Practice of Tax Competition 27
Kimberly A. Clausing
Chapter Three – Winners and Losers of Tax Competition 55
Philipp Genschel and Laura Seelkopf
Chapter Four – Tax Competition: An Internalised Policy Goal 77
Lyne Latulippe
PART TWO – SHORTCOMINGS OF THE CURRENT
REGULATORY FRAMEWORK AND INITIATIVES 101
Chapter Five – A Strange Revolution: Mock Compliance and the
Failure of the OECD’s International Tax Transparency Regime 103
Richard Woodward
Chapter Six – Redistributive Tax Co-operation: Automatic Exchange of
Information, US Power and the Absence of Joint Gains 123
Lukas Hakelberg
Chapter Seven – Does FATCA Teach Broader Lessons about
International Tax Multilateralism? 157
Itai Grinberg
Chapter Eight – The G20, BEPS and the Future of International
Tax Governance 175
Richard Eccleston and Helen Smith
vi Global Tax Governance
PART THREE – NORMATIVE PRINCIPLES
FOR GLOBAL TAX GOVERNANCE 199
Chapter Nine – Tax Competition: A Problem of Global or
Domestic Justice? 201
Miriam Ronzoni
Chapter Ten – International Taxation and the Erosion of Sovereignty 215
Laurens van Apeldoorn
Chapter Eleven – Whose Tax Base? The Ethics of Global Tax Governance 231
Peter Dietsch
PART FOUR – FROM THEORY TO PRACTICE: JUST
INSTITUTIONS FOR INTERNATIONAL TAX GOVERNANCE 253
Chapter Twelve – Towards an International Yardstick for Identifying
Tax Havens and Facilitating Reform 255
Markus Meinzer
Chapter Thirteen – A Proposal for Unitary Taxation and Formulary
Apportionment (UT+FA) to Tax Multinational Enterprises 289
Reuven S. Avi-Yonah
Chapter Fourteen – International Financial Transaction Taxation,
Public Goods and Justice 307
Gabriel Wollner
Chapter Fifteen – Institutional Reform of Global Tax Governance:
A Proposal 325
Thomas Rixen
Index 351
Project
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