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International tax competition and justice: The case for global minimum tax rates
Abstract
International tax competition undermines states’ capacity for redistributive taxation. It is thus problematic from the point of view of both cosmopolitan and internationalist theories of justice. This article examines the proposal of a fiscal policy constraint that prohibits tax policies if they are strategically motivated and harmful to effective fiscal self-determination internationally. I argue that we should opt for a more robust, preference-independent mechanism to prevent harmful tax competition instead. States should, as a matter of justice, accept global minimum tax rates on mobile tax bases.
... Em outras abordagens normativas, teóricos internacionalistas partem da constatação de que as escolhas de políticas tributárias nacionais causam externalidades significativas para outros países (Rixen, 2011;Dietsch;Rixen, 2014;Ronzoni, 2014;Dagan, 2017;Cassee, 2019;Ozai, 2020). Por conta disso, preconizam arranjos institucionais internacionais comprometidos com o resgate da autodeterminação fiscal nacional e de um regime tributário internacional mais equânime. ...
Resumo O quadro geral de desregulamentação econômica, de mobilidade dos fatores de produção e de digitalização da economia acelerou os processos de competição fiscal prejudicial e de planejamento tributário agressivo, aumentando os problemas relacionados à determinação dos direitos fiscais e à partilha de lucros entre os Estados, e colocando em causa as regras do regime tributário internacional. Desde a crise de 2008, o referido regime passou por importantes reformas, com destaque para o Acordo Tributário Global, em 2021. Tendo como referência teórica o debate normativo em torno de questões de justiça no regime tributário internacional, principalmente o cosmopolitismo e o internacionalismo, este artigo analisa esse processo de reforma.
... However, the different levels of development of the digital economy make different countries have different ideas on their digital service tax bases, starting points, and tax rates. Nevertheless, as far as the digital economy itself is concerned, its unique cross-territory characteristics objectively require a relatively unified global tax governance system, which requires a consensus among different countries, otherwise, it is likely to give rise to tax pits, tax havens, and other phenomena that intensify bottom-up competition in international taxation and undermine the fairness of the international business environment (Cassee, 2019). This has given rise to the coexistence of two tax governance strategies for the digital economy in the international community. ...
The digital business model emerges as a new business model and gradually penetrates global industries, and countries are putting in place various digital strategies to support their development. As one of the important tools, taxation strategies are highly expected by countries, which not only describe the economic development pattern of a country but also show the digital leadership of a country. Some countries have introduced their own unilateral digital services tax to govern their digital business models, while others have looked more to the global minimum tax, resulting in the current situation of both a unilateral digital services tax and a global minimum tax. However, both of them are of great reference value for the tax governance of digital business models. This paper compares the development history of digital tax strategies, categorizes, and analyzes the design logic of existing digital tax strategies, and takes China, one of the major digital economy countries, as an example to propose China’s digital tax strategies by drawing on international experience. We set an example for the design of digital economy tax strategies for countries around the world so that they can manage digital business models more efficiently.
Purpose
This paper aims to argue that the endogenous processes of profit shifting by MNEs and tax competition lead not just to inequality but constitute a case of global injustice. The provisions of the planned “two-pillar” reforms to global corporate taxation are then considered relative to the minimum conditions for background justice in taxation.
Design/methodology/approach
This paper is partly conceptual, based on relevant theoretical work in philosophy, and partly policy-focussed, based on an assessment of the OECD/G20 “two-pillar solution”.
Findings
The normative case for considering international tax competition as a global justice issue is developed, contrasting the cosmopolitan and non-cosmopolitan (“internationalist”) approaches. Three key minimum conditions for background justice in term of international taxation are established. This paper concludes that the two-pillar solution is likely to fail in global justice terms not because of its principles, which are sound, but because its redistributive scope is insufficiently great to have a major effect in correcting the inequality arising from tax competition.
Originality/value
This paper applies the philosophical concept of global justice to a specific issue in international business: MNE profit shifting and tax competition policy.
Widespread tax evasion and avoidance have recently led to both significant reforms of international tax governance and increased attention from theorists of global tax justice. Against the background of an analysis of the double challenge of effectiveness and distribution facing the taxation of multinational enterprises, this paper puts forward a taxonomy of recent contributions of the tax justice literature. This taxonomy not only opens up an original angle of interpretation on global tax justice, but also provides a vantage point from which to evaluate recent reforms by the Organisation for Economic Co-operation and Development.
Çok uluslu şirketlerin kazançlarını, çeşitli yöntemlerle vergi cennetlerine aktarması gelişmiş ve gelişmekte olan ülkelerin vergi tabanlarında aşınmaya yol açmaktadır. Özellikle günümüzde dijital ekonominin yaygınlaşması ile birlikte teknoloji devi şirketleri bünyesinde barındıran çok uluslu şirketlerin vergiden kaçınma imkanları daha fazla artmıştır. Kurumlar vergisi uyumlaştırması ve/veya küresel asgari oranlı kurumlar vergisi önerisine ilişkin olarak uluslararası kurum ve kuruluşlar tarafından uzun yıllardır çalışmalar sürdürülmektedir. Nitekim dijitalleşmenin ve ekonominin küreselleşmesinden kaynaklanan vergi bazlı sorunlar için OECD öncülüğünde 137 ülke tarafından Ekim 2021'de %15 oranlı küresel kurumlar vergisine ilişkin anlaşmaya imza atılmıştır. Söz konusu mutabakat ile birlikte çok uluslu şirketleri orta ve uzun vadede etkileyecek vergilendirmenin temelleri atılmıştır. Öneriye ilişkin düzenlemeler, OECD'nin yıllardır devam eden vergi rekabetinin önlenmesi ve dijital işlemlerin vergilendirilmesi ile ilgili çalışmalarına katkı sağlamaktadır. Söz konusu önerinin uluslararası vergi standartlarında önemli değişikliklere yol açması ve çok uluslu şirketlerin vergilendirilmesi ile ilgili küresel bazda temel bir çerçeve oluşturması beklenmektedir. Dijital şirketler de dahil olmak üzere çok uluslu şirketlerin ikamet ettikleri ülke haricinde faaliyetini sürdürdüğü ya da kazanç elde ettiği ülkelerde de vergiye tabi olması amaçlanmaktadır. Anlaşmanın uygulanması ile birlikte Dijital Hizmet Vergisi gibi ülkelerin tek taraflı eylemlerinin sona ermesi söz konusu olacaktır. Uygulamaya ilişkin olarak netlik sağlanan bazı hususların yanı sıra eleştiriye açık olan ve muğlak noktalar barındıran bazı konular hala devam etmektedir. Çalışmanın amacı, "dijital çağda çığır açan vergi anlaşması" olarak nitelendirilen küresel asgari oranlı kurumlar vergisi önerisini değerlendirmektir. Bu bağlamda öncelikle geçmişten günümüze kadar OECD ve G7 gibi uluslararası kurumlar tarafından sürdürülen uluslararası vergi reformlarına ilişkin çalışmalara değinilecektir. Daha sonra 2023 yılında uygulamaya geçirilmesi planlanan küresel asgari oranlı kurumlar vergisi önerisi ve önerinin çeşitli açılardan etkileri tartışılacaktır. Abstract The transfer of multinational companies' earnings to tax havens by various methods leads to an erosion in the tax bases of developed and developing countries. Especially today, with the spread of the digital economy, the tax avoidance that comprise technology giant companies have increased more. Studies have been carried out by international institutions and organizations for many years regarding corporate tax harmonization and/or the global minimum rate corporate tax proposal. As a matter of fact, 137 countries under the leadership of the OECD signed an agreement on a 15% global corporate tax rate in October 2021 for tax-based problems caused by digitalization and globalization of the economy. With the said agreement, the foundations of taxation have been laid, which will affect multinational companies in the medium and long term. The regulations regarding the proposal contribute to the work of the OECD on the prevention of tax competition and the taxation of digital transactions, which has been going on for many years. It is expected that this proposal will lead to significant changes in international tax standards and create a basic framework for taxation of multinational companies on a global basis. Multinational companies, including digital companies are also intended to be subject to taxes in countries where they operate or earn outside their country of residence. Along with the implementation of the agreement, there will be an end to unilateral actions of countries such as the Digital Services Tax. In addition to some issues that have been clarified regarding the application, some issues that are open to criticism and contain ambiguous points are still ongoing. The aim of the study is to evaluate to global minimum rate corporate tax proposal, which has been described as a "groundbreaking tax agreement in the digital age" In this context, first of all, the studies on international institutions such as the OECD and G7 from the past to the present will be discussed. Then, the global minimum rate corporate tax proposal, which is planned to be implemented in 2023, and the effects of the proposal on various aspects will be discussed.
Teşvikler devletin ekonomiye müdahale araçları içerisinde yer almakta ve etkin kullanımı neticesinde faydalı sonuçlar ortaya çıkarmaktadır. Ülkeler açısından özellikle de döviz açığı bulunan ülkeler için önemli bir yere sahip olan turizm faaliyetleri ülke ekonomileri için önemli bir gelir kaynağıdır. Turizm sektöründe uygulanacak teşvikler yoluyla yıllık planlama doğrultusunda katma değeri yüksek alanlara tasarrufların yönlendirilmesi ve bu tasarrufların etkin bir şekilde kullanılması amaçlanmaktadır. Bunun yanı sıra üretim ve istihdamın artırılmasını özendirmek bu sayede bölgesel gelişmişlik farklılıklarının giderilmesi diğer amaçlar içerisinde yer almaktadır. Bu tür teşviklerle uluslararası rekabet edilebilirliğin de hedeflenmesi söz konusudur. Devlet tarafından sağlanan bu teşvikler bazı bölgelere ulusal ve uluslararası alanda doğrudan yatırımları hızlandırıcı niteliğe sahipken ar-ge yatırımlarını da teşvik edici nitelikte olmaktadır. Doğru kullanılması ve yönlendirilmesi durumunda birçok açıdan faydalı olan teşviklerin uygulanması esnasında bölge ayrımının doğru yapılması ve teşvik sınırları belirlenirken bölgelerin iç dinamiklerinin göz önünde bulundurulması teşvik sisteminin etkinliği ve verimliliği açısından oldukça önemli bir yere sahiptir. Uygulanan teşvik programlarının bazı bölgeler açısından daha cazip nitelikte olması teşviklerin asıl amaçlarından biri olan bölgesel gelişmişlik farklılıklarının daha da genişlemesine neden olmaktadır. Bu hususta teşvik politikalarının daha iyi dizaynı bu sorunların ortaya çıkmasını engelleyecektir. Çalışmada Türkiye’de uygulanan turizm teşvik politikalarının genel çerçevesi incelendikten sonra bu teşviklerin güçlü ve zayıf yönleri ele alınmış , daha etkin bir teşvik politikası için önerilerde bulunulmuştur.
AZAT, Gülşah, Tax Havens Within The Framework Of The Concept Of Space Transformed By Globalization, M.A. Thesis, Ankara, 2020
Goods, capital, news and information flows have crossed the boundaries with globalization. In line with the technological developments, capital has settled in the most attractive regions for this unlimited mobility in recent years. Countries seeking to attract capital by providing tax advantages to the capital. As a result of this, tax havens which suggests a shift of tax burden emerged. These jurisdictions also share limited or no financial information with foreign tax authorities.
In this thesis, it is aimed to establish a historical connection by addressing the subject of tax havens in the process of spatial transformation. The concept of space has been a very important factor in terms of capital-space relationship with its effect on production forms from ancient times to the digital age. Capital has become independent from the space and has exceeded the physical limits of the space. Thus, capital gaining international mobility has shaped the tax policies of countries. Especially, digitalization of space has increased the difficulties in taxation. This situation caused the tax base to erode and tax revenues to decrease. On the other hand, digitization has allowed information to be spread easily. Thus, it has become easier to access digitally recorded information about tax evasion that causes tax revenue to drop. In this regard, Panama Papers and Paradise Papers played useful roles in ensuring leaks and transparency in tax systems. After the information that emerged in these leaks, the suggestions offered by international organizations were diversified and their measures were increased. At the same time, these leaks show that the information exchange agreements required to ensure transparency have demonstrated their importance.
Dieser Artikel sucht nach Lösungen für ein Dilemma: Ein starker Steuerstaat ist die Grundvoraussetzung für die politische Stabilität der wirtschaftlichen Globalisierung. Die Globalisierung – in Form des Steuerwettbewerbs – unterminiert aber die demokratische Selbstbestimmung der Nationalstaaten über die Höhe, Struktur und Verteilungswirkung ihrer Steuereinnahmen kollektiv zu entscheiden. Zur Rückgewinnung der demokratisch legitimierten nationalen Souveränität bedarf es einer internationalen Regulierung des Steuerwettbewerbs. Wie können aber unter Bedingungen fiskalischer Interdependenz die fiskalischen Selbstbestimmungsrechte aller Staaten legitim voneinander abgegrenzt werden? Es wird eine republikanische Konzeption fiskalischer Selbstbestimmung vorgeschlagen. Daraus werden zwei Prinzipien der internationalen Steuerpolitik sowie eine mögliche Form ihrer Institutionalisierung in einer internationalen Steuerorganisation (International Tax Organization – ITO) abgeleitet.
The base erosion and profit shifting (BEPS) initiative of the Organisation for Economic Co-operation and Development (OECD) and G20 countries marks an important development in the reform of the international taxation regime. In this paper I argue that the initiative nevertheless fails to provide a coherent account of what global justice requires in the realm of fiscal policy. While the OECD’s ostensible aim to increase and protect the tax sovereignty of states is commendable, there is insufficient attention for the distribution of relative tax sovereignty. I show that current global income inequality is correlated with significant inequality of tax sovereignty, that this inequality is unjust on a plausible conception of what global justice requires, and that the BEPS initiative is unlikely to meaningfully address this injustice. I close by suggesting that an internationalist conception of justice concerned with securing the tax sovereignty of independent polities may need to prescribe the creation of glob...
Global income inequalities are met with increasing calls for direct supranational redistribution. This article argues that from the perspective of political feasibility, this approach should not be prioritised. We use the example of tax competition to show that supranational regulation that stops short of direct redistribution has better chances of being implemented. Moreover, as the case of tax competition illustrates, such regulation can help to shore up the capacity of nation states to redistribute internally, which indirectly tends to reduce global inequalities, too. Against this background, we formulate the conditional subsidiarity principle of redistribution. It states that when the case for direct supranational redistribution is built on the alleged incapacity of the state to redistribute due to the pressures of globalisation, our first instinct should be regulatory reform in order to restore this capacity. Finally, the article asks whether two prominent proposals for global taxation – the global resource dividend and the financial transaction tax – pass the test of the conditional subsidiarity principle.
http://ssrn.com/abstract=2502523
Versions of this article have been presented at the Canadian Political Science Association (Montréal, 2010), the ECPR General Conference (Reykjavik, 2011), the Social Science Research Center Berlin (WZB) as well as at the Centre de Recherche en Éthique de l'Université de Montréal (CREUM). For comments on previous drafts of this article we thank participants at these events and, in particular, Kim Brooks, Ryoa Chung, Matthias Ecker-Ehrhardt, Tim Gemkow, Anja Görnitz, Monika Heupel, Dominic Martin, Mihaela Mihai, Jean-Pierre Vidal, Lora Viola, Daniel Weinstock, David Wiens, Jurgen de Wispelaere, and Michael Zürn. Special thanks are due to Barbara Buckinx, Miriam Ronzoni, and Christian Schemmel for detailed written comments and to Georg Simmerl for his research assistance. We acknowledge financial support from the Humboldt Foundation, the German Academic Exchange Service (DAAD), and the Social Sciences and Humanities Research Council of Canada (SSHRC).
http://ssrn.com/abstract=2502519
The European Union (EU) tax mandate remains narrow. That there was only a limited transfer of tax authority to the EU exemplifies the failure of political and fiscal integration. Using a political economy framework, this article analyzes why the heads of state rejected tax harmonization proposals in the intergovernmental conferences. The presented findings of the original data on the Maastricht, Nice and Lisbon negotiations support the main hypothesis derived from the theoretical framework – namely that resistance against tax harmonization came predominantly from low-tax countries. Moreover, the results indicate that after the accession of the central and eastern European countries the prospects of harmonizing tax policy starkly decreased. The analysis shows that tax heterogeneity and the enlargements have negative effects on tax integration. Based on the empirical findings and the theoretical framework, the article concludes by discussing how the creation of the monetary union restructured the politics of tax Europeanization and fiscal integration.
The world's most privileged can not claim to be free of any responsibility for the deprivation suffered by the poorer of the poor countries. Such deprivation is the result of a common institutional framework, so it ought to be seen as injustice. Therefore, the erradication of radical deprivation depends upon a reform of our global institutions (chiefly the economic ones). Arguments are presented on behalf of one of the current proposals: the introduction of a global dividend to be applied to the use of natural resources and to pollution-led activities. The revenue can then be used to the emancipation of the global poor.
Corporate taxes exert a variety of effects on business behaviour. A wealth of empirical evidence assesses the magnitude of these behavioural margins of taxation. This article offers an up-to-date review and aims to provide common ground by computing for each distortion the semi-elasticity of the corporate tax base. We pay particular attention to international investment where it is not a priori clear whether marginal investment decisions or discrete locations are more important. Using an extension of the meta analysis of De Mooij and Ederveen (2003), we explore the extent to which existing studies reveal differences in effect size between the intensive and extensive margins of international investment. Copyright 2008, Oxford University Press.
Dieser Artikel sucht nach Lösungen für ein Dilemma: Ein starker Steuerstaat ist die Grundvoraussetzung für die politische Stabilität der wirtschaftlichen Globalisierung. Die Globalisierung – in Form des Steuerwettbewerbs – unterminiert aber die demokratische Selbstbestimmung der Nationalstaaten über die Höhe, Struktur und Verteilungswirkung ihrer Steuereinnahmen kollektiv zu entscheiden. Zur Rückgewinnung der demokratisch legitimierten nationalen Souveränität bedarf es einer internationalen Regulierung des Steuerwettbewerbs. Wie können aber unter Bedingungen fiskalischer Interdependenz die fiskalischen Selbstbestimmungsrechte aller Staaten legitim voneinander abgegrenzt werden? Es wird eine republikanische Konzeption fiskalischer Selbstbestimmung vorgeschlagen. Daraus werden zwei Prinzipien der internationalen Steuerpolitik sowie eine mögliche Form ihrer Institutionalisierung in einer internationalen Steuerorganisation (International Tax Organization – ITO) abgeleitet.
Covering the period from the 1920s, when international tax policy was solely about avoiding double taxation, to the present era of international tax competition, Rixen investigates the fate of 'the power to tax' in an era of globalization, illustrating that tax sovereignty is both shaped and constrained by an international tax regime.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2734796
To a large extent, the differences between my four interlocutors and me have more to do with the way we choose to frame a question or approach a problem than with substantive disagreements. In her discussion of temporary workers and the brain drain, Gillian Brock implicitly assumes a different background framework of moral responsibility from the one I adopt in my book. Similarly, Cécile Fabre asks important questions about the intersection of immigration and criminal justice, but ones that I chose not to pursue in quite the same way or, in some cases, at all. Matthias Risse says that political theory should be 'action-guiding', and I try to problematize that claim, at least to the extent that it limits the questions we can ask. Finally, I applaud the attention that Sarah Song brings to the link between political community and social membership but resist her suggestion that this shows that political community is more fundamental than social membership. I also suggest the need to clarify further the limits to democratic self-determination.
It is a commonplace of political history that, at some times in some places, liberalism and nationalism have not been incompatible. More than that, they have been good friends-lending each other vital support, rejoicing in one another’s triumphs, holding a shared view of who is the enemy and so forth. Nor, according to Onora O’Neill, has this affinity been merely coincidental. In a pre-liberal world, [a person’s] social identity might be given by tribe or kin, it might not depend on those who share a sense of identity being collected in a single or an exclusive territory. Because liberal principles undercut reliance on pedigree and origin as the basis for recognizing who count as our own, and who as outsiders, liberalism had to find some alternative basis for identifying who counts. Pre-eminent among these ways are the differential rights with respect to a given state that citizenship confers. (O’Neill, 1992, p. 118) Liberalism, she seems to be suggesting, has actually needed nationalism. Why? Well, because its hallowed subjects-namely individual persons, each of whom it lavishly adorns with all manner of rights and liberties-find themselves badly in need of some salient form of social identity when they emerge from their various imperial subjugations, ancient and modern. For whatever severe oppression and disempowerment they for so long endured under those subjugations, one thing they did not thereby lack was a strong sense of social identity: a sense of identity underwritten by their being officially and principally regarded as members of this family or that clan.
Under conditions of high capital mobility, states are pressurised into various forms of tax competition to attract or retain capital and investors. When this occurs, the capacity of domestic institutions autonomously to generate fiscal policies is constrained. What exactly, if anything, is unjust about this phenomenon? This paper argues that tax competition puts particular pressure on internationalists, who must acknowledge that its occurrence makes our obligations of global justice more demanding, and that such obligations require supranational institutions in order to be discharged. However, to the extent that tax competition is unjust from an internationalist point of view, this is due to the specific harm it does to states. Thus, the paper makes three contributions to the literature: it shows that (1) tax competition has an impact on the demandingness of internationalist obligations of justice; (2) discharging such obligations commits internationalists to accept a higher level of supranational institutionalization than is currently acknowledged; yet (3) both the specific content of such obligations, and the kind of supranational regulation that is needed to discharge them, differ from those which cosmopolitans support. In sum, there are some cosmopolitan bullets which internationalists must bite, and others which they should continue to resist.
This article attempts to estimate the magnitude of corporate tax avoidance and personal tax evasion through offshore tax havens. US corporations book 20 percent of their profits in tax havens, a tenfold increase since the 1980; their effective tax rate has declined from 30 to 20 percent over the last 15 years, and about two-thirds of this decline can be attributed to increased international tax avoidance. Globally, 8 percent of the world?s personal financial wealth is held offshore, costing more than $200 billion to governments every year. Despite ambitious policy initiatives, profit shifting to tax havens and offshore wealth are rising. I discuss the recent proposals made to address these issues, and I argue that the main objective should be to create a world financial registry.
This essay discusses the ethical issues raised by immigration to rich democratic states in Europe and North America. The article identifies questions about the following topics: access to citizenship, inclusion, residents, temporary workers, irregular migrants, non-discrimination in admissions, family reunification, refugees, and open borders. It explores the answers to these questions that flow from a commitment to democratic principles.
The need to use green taxes to protect the environment is urgent, particularly because of climate change, and can be justified via sound deontological and consequence‐based arguments. One very influential criticism of such taxes, however, claims that they disproportionately burden relatively poor individuals who tend to contribute to environmental problems far less than wealthier persons. Critics can also object that because of the link between economic inequality and environmental destruction it is preferable to adopt environmental measures that impede rather than accelerate the growth of inequality. Defusing these criticisms, the article argues that various types of green fiscal reform can both avoid disproportionally burdening those who pollute least and reduce the economic inequalities that income taxes leave behind, and slow down the collectively self‐defeating consumption arms race that currently besets so many affluent societies. Global progressive environmental taxation is also a possibility, and even easier to justify.
There has recently been much debate about the idea of levying a tax on particular transactions on international financial markets. Economists have argued about how much revenue such an international financial transaction tax
would raise and they disagree about what effects it would have on trade volumes, financial stability, and overall growth. Politicians have argued about the feasibility of introducing such a tax internationally and they disagree on its adequacy as a policy response to the current financial and economic crisis. This article contributes to the debate about international financial transaction taxation by bringing the perspective of political philosophy to bear on the politicians’ and economists’ arguments about policy. I shall outline a framework for thinking about justice in finance, and defend the idea of an international financial transaction tax as an instrument for making the international financial system more just.
This paper surveys the theory of international tax competition and coordination, which, matching the increasing policy importance of the topic, has grown substantially over the last thirty years. It focuses on the taxation of capital income, stressing that issues arise not only in relation to movements of productive capital – the primary concern in the earliest literature – but also in relation to the shifting of paper profits. It sets out, assesses, and uses as a unifying framework, the two workhorse models in the area. After discussing the welfare properties and comparative statics of non-cooperative equilibria under unconstrained tax competition, the paper analyses key issues of coordination (within subsets of countries, for instance) and a range of specific topics (such as the nature and impact of tax havens).
Pogge's proposal for a Global Resources Dividend (GRD) has been criticized because its likely effects would be less predictable than Pogge supposes and could even be counterproductive to the main aim of relieving poverty. The GRD might also achieve little with respect to its secondary aim of promoting environmental protection. This article traces the problems to Pogge's inadequate conception of natural resources. It proposes instead to conceive of natural resources in terms of `ecological space'. Using this conception, redistributive principles follow with a more definite logic from Pogge's own supporting moral argument. The proposed alternative approach also promises a more direct contribution to Pogge's secondary aim of resource conservation and environmental protection. I conclude that if any redistributive resource-based tax should be levied on nations, then there are at least four decisive reasons to favour levying a tax related to a nation's per capita utilization of ecological space rather than the GRD.
Many poor and oppressed people wish to leave their countries of origin in the third world to come to affluent Western societies. This essay argues that there is little justification for keeping them out. The essay draws on three contemporary approaches to political theory — the Rawlsian, the Nozickean, and the utilitarian — to construct arguments for open borders. The fact that all three theories converge upon the same results on this issue, despite their significant disagreements on others, strengthens the case for open borders and reveals its roots in our deep commitment to respect all human beings as free and equal moral persons. The final part of the essay considers communitarian objections to this conclusion, especially those of Michael Walzer.
Work on this paper was supported by a Laurance S. Rockefeller fellowship at the Princeton University Center for Human Values. Written for a conference on “the Ethics of Nationalism” at the University of Ihnois at Urbana-Champaign, it was also presented to audiences at Princeton, Hamard, New York, Stanford, and Oxford Universities. I an1 grateful for the barrage of' forceful criticisms 1 have received-in particular from Alyssa Bernstein, Brian Barry, Lea Brilmayer, Anthony Coady, John Cooper, Roger Crisp, Peter de Marneffe, Alan Houston, Frances Kamm, Elizabeth Kiss, Christine Korsgaard, Ling Tong, Stuart White, and the editors of Philosophy G Public Affuzrs.
In a capitalist economy, taxes are the most important instrument by which the political system puts into practice a conception of economic and distributive justice. Taxes arouse strong passions, fueled not only by conflicts of economic self-interest, but by conflicting ideas of fairness. Taking as a guiding principle the conventional nature of private property, Murphy and Nagel show how taxes can only be evaluated as part of the overall system of property rights that they help to create. Justice or injustice in taxation, they argue, can only mean justice or injustice in the system of property rights and entitlements that result from a particular regime. Taking up ethical issues about individual liberty, interpersonal obligation, and both collective and personal responsibility, Murphy and Nagel force us to reconsider how our tax policy shapes our system of property rights.
We develop a tax competition framework in which some jurisdictions, called tax havens, are parasitic on the revenues of other countries, and these countries use resources in an attempt to limit the transfer of tax revenue from capital taxation to the havens. We demonstrate that the full or partial elimination of tax havens would improve welfare in non-haven countries. We also demonstrate that the smaller countries choose to become tax havens, and we show that the abolition of a sufficiently small number of the relatively large havens leaves all countries better off, including the remaining havens. We argue that these results extend to the case where there are also taxes on wage income that involve administrative and compliance costs.
This paper reviews potential advantages and disadvantages of capital tax competition. Tax competition may introduce, mitigate, or exacerbate inefficiencies in both the private sector and the public sector. In different models, tax competition may either limit or increase public expenditures and taxes on mobile factors, with differing welfare consequences. We also discuss the implications of tax competition for redistributive policies and for policies dealing with risk, and we identify some of the possible empirical implications of tax competition.
Tax competition for mobile capital can undermine the attempts of governments to redistribute income from rich to poor. I study whether international tax coordination can alleviate this problem, using a general equilibrium model synthesizing recent contributions to the tax competition literature. The model highlights the crucial distinction between global tax coordination and regional coordination. With high capital mobility between the tax union and the rest of the world, the welfare gain from regional capital income tax coordination is only a small fraction of the gain from global coordination, even if the tax union is large relative to the world economy.
The multinationalization of corporate investment in recent years has given rise to a number of international tax avoidance schemes that may be eroding tax revenues in industrialized countries, but which may also reduce tax burdens on mobile capital and so facilitate investment. Both the welfare effects of and the optimal response to international tax planning are therefore ambiguous. Evaluating these factors in a simple general equilibrium model, we find that citizens of high-tax countries benefit from (some) tax planning. Paradoxically, if tax rates are not too high, an increase in tax planning activity causes a rise in optimal corporate tax rates, and a decline in multinational investment. Thus fears of a “race to the bottom” in corporate tax rates may be misplaced.
Consideration of agglomeration reverses standard theoretical propositions in international tax competition. We show greater economic integration may lead to a ‘race to the top’ rather than a race to the bottom. Also, ‘split the difference’ tax harmonisation may harm both nations, a result that may explain why real-world tax harmonisation is rare. The key is that industrial concentration creates ‘agglomeration rent.’ The ‘core’ region can thus charge a higher tax rate without losing capital. The size of such rent is a bell-shaped function of the level of integration, so the tax gap first widens before narrowing as integration increases.
Pigou's proposition that the use of distorting taxes rather than neutral head taxes reduces public service levels is examined in this paper. A simple model with a national system of competing local governments is utilized to demonstrate that the use of a distorting property tax on mobile capital decreases the level of residential public services. The case where public services are an intermediate producer good is also considered.
The paper analyzes Nash equilibrium when two jurisdictions set tax rates on a tax base which is mobile between them. Population differences imply tax differences. The smaller jurisdiction levies a lower tax rate in equilibrium, and its residents are better off than those in the larger jurisdiction. The Nash equilibrium is inefficient. If the two jurisdictions merged, the resulting allocation would be efficient. However, if differences in population are great enough, residents of the small jurisdiction would be made worse off by such a merger.
We show that agglomeration forces can reverse standard international-tax-competition results. Closer integration may result first in a race to the top' and then a race to the bottom, a result that is consistent with recent empirical work showing that the tax gap between rich and poor nations follows a bell-shaped path (Devereux, Griffith and Klemm 2002). Moreover, split-the-difference tax harmonization can make both nations worse off. This may help explain why tax harmonisation which is Pareto improving in the standard model is so difficult in the real world. The key theoretical insight is that agglomeration forces create quasi-rents that can be taxed without inducing delocation. This suggests that the tax game is something subtler than a race to the bottom. Advanced 'core' nations may act like limit-pricing monopolists toward less advanced 'periphery' countries. Since agglomeration rents are a bell-shaped function of the level of integration, the equilibrium tax gap in our tax game is also bell shaped.
We explain the spatial concentration of economic activity, in a model of economic geography, when the cost of environmental policy - which is increasing in the concentration of pollution - and an immobile production factor act as centrifugal forces, while positive knowledge spillovers and iceberg transportation costs act as centripetal forces. We study the agglomeration eects caused by trade-os between centripetal and centrifugal forces. The above eects govern rms� location decisions and, as a result, they de ne the distribution of economic activity across space. We derive the rational expectations equilibrium, which results either in a monocentric or in a polycentric city, and the regulator�s optimum, which results in a bicentric city. We compare the outcomes and characterize the optimal spatial policies.
- Rixen T