At the peak of the 2008 financial crisis, the Internal Revenue Service (IRS) issued Notice 2008–83 (the Notice), administrative guidance that limited Internal Revenue Code (the Code) section 382, an important tax rule designed to discourage tax-motivated acquisitions. Although styled as a mere interpretation of existing law, the Notice has been widely viewed as an improper exercise of the IRS’s authority that undermined its legitimacy. But did the Notice work? There were many extraordinary interventions during the financial crisis that raised questions about eroding the rule of law and the long-term destabilizing effects of bailouts. In a financial crisis, regulators must weigh these real, but distant and uncertain, costs against the immediate benefits of the intervention. Toward that end, we report the first evidence of the effects of limiting Code section 382 during the 2008 financial crisis. Although we find little evidence that the Notice affected bank merger activity, those mergers that occurred while the Notice was in effect produced lower post-merger income growth. The results suggest that Code section 382 may have some benefits in terms of discouraging tax-motivated acquisitions. We use the Notice to illustrate the concerns that should guide lawmakers’ decisions about if and how to make law during a crisis.
{"title":"Crisis-Driven Tax Law: The Case of Section 382","authors":"A. Choi, Quinn D. Curtis, Andrew T. Hayashi","doi":"10.5744/FTR.2020.1000","DOIUrl":"https://doi.org/10.5744/FTR.2020.1000","url":null,"abstract":"At the peak of the 2008 financial crisis, the Internal Revenue Service (IRS) issued Notice 2008–83 (the Notice), administrative guidance that limited Internal Revenue Code (the Code) section 382, an important tax rule designed to discourage tax-motivated acquisitions. Although styled as a mere interpretation of existing law, the Notice has been widely viewed as an improper exercise of the IRS’s authority that undermined its legitimacy. But did the Notice work? There were many extraordinary interventions during the financial crisis that raised questions about eroding the rule of law and the long-term destabilizing effects of bailouts. In a financial crisis, regulators must weigh these real, but distant and uncertain, costs against the immediate benefits of the intervention. Toward that end, we report the first evidence of the effects of limiting Code section 382 during the 2008 financial crisis. Although we find little evidence that the Notice affected bank merger activity, those mergers that occurred while the Notice was in effect produced lower post-merger income growth. The results suggest that Code section 382 may have some benefits in terms of discouraging tax-motivated acquisitions. We use the Notice to illustrate the concerns that should guide lawmakers’ decisions about if and how to make law during a crisis.","PeriodicalId":54058,"journal":{"name":"EJournal of Tax Research","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2020-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77485830","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
As Congress gives the Internal Revenue Service more tasks to perform beyond its function of assessing and collecting taxes, courts, practitioners, and academics are struggling to apply the Anti-Injunction Act (AIA) as the IRS promulgates procedures in the course of fulfilling new mandates. The AIA has its origins in the post-Civil War era when the federal government established new procedures ensuring the assessment and collection of taxes. It may seem odd an over 150-year old provision is fueling a growing number of contested and controversial disputes. Yet, the AIA has taken on renewed importance as courts consider challenges to tax regulations and guidance, fueled in part by the increasing importance of administrative law in issues of tax procedure and administration. From a normative perspective, we sympathize with legislative proposals providing additional ways to challenge regulations and other IRS guidance. We believe allowing an opportunity to bring good faith pre-enforcement challenges to regulations and guidance will enhance public confidence in the tax system and improve the quality of the rules in the first instance. Given congressional dysfunction and a low probability of any meaningful legislation addressing the issue (at least in the short term), courts, practitioners, and academics are left struggling with an increasingly complex and confused AIA jurisprudence. In this Article, which draws heavily on the AIA material in the Thompson Reuters treatise IRS Practice and Procedure where one of us is the lead successor author and the other a contributing author, we provide a discussion and analysis of the case law. Part I details the statutory provisions of the AIA and the Declaratory Judgment Act (DJA). Part II discusses judicially created exceptions to applications of the AIA. Part III examines what constitutes “restraining the assessment or collection” of tax. Part IV explores what constitutes a “tax” for purposes of the AIA and DJA.
{"title":"The Morass of the Anti-Injunction Act: a Review of the Cases and Major Issues","authors":"Leslie M. Book, M. Ames","doi":"10.2139/SSRN.3541312","DOIUrl":"https://doi.org/10.2139/SSRN.3541312","url":null,"abstract":"As Congress gives the Internal Revenue Service more tasks to perform beyond its function of assessing and collecting taxes, courts, practitioners, and academics are struggling to apply the Anti-Injunction Act (AIA) as the IRS promulgates procedures in the course of fulfilling new mandates. The AIA has its origins in the post-Civil War era when the federal government established new procedures ensuring the assessment and collection of taxes. It may seem odd an over 150-year old provision is fueling a growing number of contested and controversial disputes. Yet, the AIA has taken on renewed importance as courts consider challenges to tax regulations and guidance, fueled in part by the increasing importance of administrative law in issues of tax procedure and administration. \u0000 \u0000From a normative perspective, we sympathize with legislative proposals providing additional ways to challenge regulations and other IRS guidance. We believe allowing an opportunity to bring good faith pre-enforcement challenges to regulations and guidance will enhance public confidence in the tax system and improve the quality of the rules in the first instance. Given congressional dysfunction and a low probability of any meaningful legislation addressing the issue (at least in the short term), courts, practitioners, and academics are left struggling with an increasingly complex and confused AIA jurisprudence. In this Article, which draws heavily on the AIA material in the Thompson Reuters treatise IRS Practice and Procedure where one of us is the lead successor author and the other a contributing author, we provide a discussion and analysis of the case law. \u0000 \u0000Part I details the statutory provisions of the AIA and the Declaratory Judgment Act (DJA). Part II discusses judicially created exceptions to applications of the AIA. Part III examines what constitutes “restraining the assessment or collection” of tax. Part IV explores what constitutes a “tax” for purposes of the AIA and DJA.","PeriodicalId":54058,"journal":{"name":"EJournal of Tax Research","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2020-02-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80877061","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
European Law plays a major role in the implementation of the BEPS Action Plan by Member States of the European Union. How does this influence the interpretation of primary and secondary EU law? On the one hand, recent secondary legislation like the Anti-Tax-Avoidance Directives explicitly aims at a full and coherent introduction of BEPS outcome into European law. But this goal has to be aligned with the liberating forces of the Internal Market which inform the legal basis for directives under Art.115 TFEU. Going further, in some recent judgments, the European Court of Justice has shown a tendency to interpret also long-standing concepts of primary EU law (like the notion of abuse of law) and existing directives (like the Parent Subsidiary Directive or the Interest Royalty Directive) in the light of the BEPS Action Plan. This is hard to defend from a methodological point of view and out of sync with the fundamental policies adopted by the European Treaties.
{"title":"Interpreting European Law in the Light of the BEPS Action Plan","authors":"W. Schoen","doi":"10.2139/ssrn.3522962","DOIUrl":"https://doi.org/10.2139/ssrn.3522962","url":null,"abstract":"European Law plays a major role in the implementation of the BEPS Action Plan by Member States of the European Union. How does this influence the interpretation of primary and secondary EU law? On the one hand, recent secondary legislation like the Anti-Tax-Avoidance Directives explicitly aims at a full and coherent introduction of BEPS outcome into European law. But this goal has to be aligned with the liberating forces of the Internal Market which inform the legal basis for directives under Art.115 TFEU. Going further, in some recent judgments, the European Court of Justice has shown a tendency to interpret also long-standing concepts of primary EU law (like the notion of abuse of law) and existing directives (like the Parent Subsidiary Directive or the Interest Royalty Directive) in the light of the BEPS Action Plan. This is hard to defend from a methodological point of view and out of sync with the fundamental policies adopted by the European Treaties.","PeriodicalId":54058,"journal":{"name":"EJournal of Tax Research","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2020-01-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89743812","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The United States Supreme Court has made clear that no litigant should have to choose between asserting his legal rights and risking prosecution. That is not so for certain challenges to Treasury regulations. Information reporting regulations are enforced through civil penalties and criminal liability. Because those civil penalties count as taxes under the Internal Revenue Code, courts have interpreted the Anti-Injunction Act to bar review of information reporting regulations until a prospective litigant violates the regulation, incurs a penalty, and sues for a refund. But intentionally violating such regulations puts the litigant in jeopardy of criminal prosecution. A would-be challenger thus finds himself in the very dilemma the Supreme Court has deemed intolerable. In this Essay, I argue that the Anti-Injunction Act’s no alternative avenue exception, properly understood, applies when a litigant must risk prosecution to seek judicial review. I also explain why the Anti-Injunction Act’s core purpose—facilitating the efficient collection of tax revenue—is not implicated by information reporting regulation challenges. This issue may soon make its way to the Supreme Court in CIC Services, LLC v. IRS, a case with a pending petition for a writ of certiorari. Time will tell whether the Supreme Court is ready to do away with one more “approach to administrative review good for tax law only.” Mayo Found. for Med. Educ. & Research v. United States, 562 U.S. 44, 55 (2011).
美国最高法院已经明确表示，诉讼当事人不应该在维护自己的合法权利和冒着被起诉的风险之间做出选择。对于财政部监管面临的某些挑战，情况并非如此。信息报告规定通过民事处罚和刑事责任来执行。由于这些民事处罚在《国内税收法》(Internal Revenue Code)中被视为税收，法院对《反禁令法》(Anti-Injunction Act)的解释是，在潜在诉讼当事人违反规定、受到处罚并起诉要求退款之前，禁止对信息报告规定进行审查。但是，故意违反这些规定将使当事人面临刑事起诉的危险。因此，一个潜在的挑战者发现自己陷入了最高法院认为无法容忍的两难境地。在本文中，我认为《反禁令法》的无替代途径例外，正确理解，适用于当事人必须冒着被起诉的风险寻求司法审查。我还解释了为什么《反禁令法》的核心目的——促进税收的有效征收——没有受到信息报告监管挑战的影响。这个问题可能很快就会在中投服务有限责任公司诉美国国税局案(CIC Services, LLC v. IRS)一案中出现，该案正在申请调卷令。时间会告诉我们，最高法院是否准备好再取消一种“只适用于税法的行政复议方式”。梅奥。为医学教育。& Research诉美国，562 U.S. 44, 55(2011)。
{"title":"Criminal Consequences and the Anti-Injunction Act","authors":"Gerald S. Kerska","doi":"10.2139/ssrn.3513379","DOIUrl":"https://doi.org/10.2139/ssrn.3513379","url":null,"abstract":"The United States Supreme Court has made clear that no litigant should have to choose between asserting his legal rights and risking prosecution. That is not so for certain challenges to Treasury regulations. Information reporting regulations are enforced through civil penalties and criminal liability. Because those civil penalties count as taxes under the Internal Revenue Code, courts have interpreted the Anti-Injunction Act to bar review of information reporting regulations until a prospective litigant violates the regulation, incurs a penalty, and sues for a refund. But intentionally violating such regulations puts the litigant in jeopardy of criminal prosecution. A would-be challenger thus finds himself in the very dilemma the Supreme Court has deemed intolerable. \u0000 \u0000In this Essay, I argue that the Anti-Injunction Act’s no alternative avenue exception, properly understood, applies when a litigant must risk prosecution to seek judicial review. I also explain why the Anti-Injunction Act’s core purpose—facilitating the efficient collection of tax revenue—is not implicated by information reporting regulation challenges. This issue may soon make its way to the Supreme Court in CIC Services, LLC v. IRS, a case with a pending petition for a writ of certiorari. Time will tell whether the Supreme Court is ready to do away with one more “approach to administrative review good for tax law only.” Mayo Found. for Med. Educ. & Research v. United States, 562 U.S. 44, 55 (2011).","PeriodicalId":54058,"journal":{"name":"EJournal of Tax Research","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2020-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83651607","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Portuguese Abstract: Este capítulo dá um panorama geral de novas medidas que buscam garantir maior previsibilidade em matéria tributária internacional, por meio da mitigação de riscos, contrastando tais inovações a outras ferramentas mais tradicionais à disposição de governos e corporações. Assim, as primeiras partes descrevem brevemente o que são acordos prévios sobre preços (APAs), auditorias conjuntas e simultâneas, o procedimento amigável e a arbitragem, para então expor os conceitos de relacionamento aprimorado e compliance cooperativo. Em seguida, é apresentado com maior detalhe o recente desenvolvimento do International Compliance Assurance Programme (ICAP), em ambas as suas fases. English Abstract: This chapter gives an overview of new measures that seek to ensure greater predictability in international tax matters, thus mitigating risks, and contrasts these innovations with more traditional tools available to governments and corporations. The first parts briefly describe advance pricing agreements (APAs), joint and simultaneous audits, mutual agreement procedures (MAP), and arbitration, further exposing the concepts of enhanced relationship and cooperative compliance. Then, it presents in more detail the recent development of the International Compliance Assurance Program (ICAP), in both its phases.
{"title":"Instrumentos de Segurança Tributária na Era Pós-BEPS (Instruments of Tax Certainty in the Post-BEPS Era)","authors":"Misabel Abreu Machado Derzi, Tarcísio Diniz Magalhães","doi":"10.2139/ssrn.3885209","DOIUrl":"https://doi.org/10.2139/ssrn.3885209","url":null,"abstract":"Portuguese Abstract: Este capítulo dá um panorama geral de novas medidas que buscam garantir maior previsibilidade em matéria tributária internacional, por meio da mitigação de riscos, contrastando tais inovações a outras ferramentas mais tradicionais à disposição de governos e corporações. Assim, as primeiras partes descrevem brevemente o que são acordos prévios sobre preços (APAs), auditorias conjuntas e simultâneas, o procedimento amigável e a arbitragem, para então expor os conceitos de relacionamento aprimorado e compliance cooperativo. Em seguida, é apresentado com maior detalhe o recente desenvolvimento do International Compliance Assurance Programme (ICAP), em ambas as suas fases. English Abstract: This chapter gives an overview of new measures that seek to ensure greater predictability in international tax matters, thus mitigating risks, and contrasts these innovations with more traditional tools available to governments and corporations. The first parts briefly describe advance pricing agreements (APAs), joint and simultaneous audits, mutual agreement procedures (MAP), and arbitration, further exposing the concepts of enhanced relationship and cooperative compliance. Then, it presents in more detail the recent development of the International Compliance Assurance Program (ICAP), in both its phases.","PeriodicalId":54058,"journal":{"name":"EJournal of Tax Research","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84980025","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The turnover-based taxes imposed by Hungary on Vodafone, Tesco and Google are found not to be State aid by the CJEU. Indeed, the Court states that a taxpayer cannot rely on the argument that the exemption enjoyed by other taxpayers constitutes State aid, in order not to pay a tax. Nevertheless, instead of relying on the criteria enshrined in Article 107 TFEU, in order to constitutes State aid the relevant test to pass is whether a tax is directly hypothecated to an aid measure. Furthermore, the three judgments touch upon the relationship between State aid control and the free movement provisions. Although the issue is not openly addressed by the Court, the two sets of rules are analyzed concurrently rather than alternatively. As for the analysis on the free movement, the Court finds that the establishment of a steeply progressive tax does not discriminate per se between home companies and the ones established abroad and thus the Hungarian law complies with EU law.
{"title":"Turnover-Based Taxes in EU State Aid Control: The ‘Hypothecation Test’ and Its Relationship With Free Movement","authors":"I. Agnolucci","doi":"10.2139/ssrn.3660401","DOIUrl":"https://doi.org/10.2139/ssrn.3660401","url":null,"abstract":"The turnover-based taxes imposed by Hungary on Vodafone, Tesco and Google are found not to be State aid by the CJEU. Indeed, the Court states that a taxpayer cannot rely on the argument that the exemption enjoyed by other taxpayers constitutes State aid, in order not to pay a tax. Nevertheless, instead of relying on the criteria enshrined in Article 107 TFEU, in order to constitutes State aid the relevant test to pass is whether a tax is directly hypothecated to an aid measure. Furthermore, the three judgments touch upon the relationship between State aid control and the free movement provisions. Although the issue is not openly addressed by the Court, the two sets of rules are analyzed concurrently rather than alternatively. As for the analysis on the free movement, the Court finds that the establishment of a steeply progressive tax does not discriminate per se between home companies and the ones established abroad and thus the Hungarian law complies with EU law.","PeriodicalId":54058,"journal":{"name":"EJournal of Tax Research","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78546692","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Who benefits from the evasion of value added taxes (VAT)? Using a reform that enforced VAT on previously non-compliant large retailers in Armenia, we estimate a one-third passthrough of the tax burden on prices. This suggests that pre-enforcement evasion rents were broadly shared with consumers through lower prices. Our theoretical and empirical results explain this low passthrough rate by the supply-chain effects and second-order compliance responses of firms to VAT enforcement. Our distributional analysis shows that households at the bottom of the income distribution benefit more from the rents of evasion.
{"title":"The Incidence of VAT Evasion","authors":"Zareh Asatryan, David Gomtsyan","doi":"10.2139/ssrn.3633730","DOIUrl":"https://doi.org/10.2139/ssrn.3633730","url":null,"abstract":"Who benefits from the evasion of value added taxes (VAT)? Using a reform that enforced VAT on previously non-compliant large retailers in Armenia, we estimate a one-third passthrough of the tax burden on prices. This suggests that pre-enforcement evasion rents were broadly shared with consumers through lower prices. Our theoretical and empirical results explain this low passthrough rate by the supply-chain effects and second-order compliance responses of firms to VAT enforcement. Our distributional analysis shows that households at the bottom of the income distribution benefit more from the rents of evasion.","PeriodicalId":54058,"journal":{"name":"EJournal of Tax Research","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77057673","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
How much information should governments reveal to consumers if consumption choices have uninternalized consequences to society? How does an alternative tax policy compare to information disclosure? We develop a price theoretic model of information design that allows empiricists to identify the welfare effects of any arbitrary information policy. Based on this model, we run a natural field experiment in cooperation with a large European appliance retailer and randomize information regarding the financial benefits of energy-efficient household lighting among more than 640,000 subjects. We find that full information disclosure strongly decreases demand for energy efficiency, while partial information disclosure increases demand. More information reduces social welfare because the increase in consumer surplus is outweighed by the rise in environmental externalities. By randomizing product prices, we identify the optimal tax vector as an alternative policy and show that sizable taxes on energy-inefficient products yield larger welfare gains than any information policy. We also document an important policy interaction: information provision dramatically reduces attention to pecuniary incentives and thereby limits the effectiveness of taxes.
{"title":"The Welfare Effects of Persuasion and Taxation: Theory and Evidence from the Field","authors":"Matthias Rodemeier, A. Löschel","doi":"10.2139/ssrn.3587339","DOIUrl":"https://doi.org/10.2139/ssrn.3587339","url":null,"abstract":"How much information should governments reveal to consumers if consumption choices have uninternalized consequences to society? How does an alternative tax policy compare to information disclosure? We develop a price theoretic model of information design that allows empiricists to identify the welfare effects of any arbitrary information policy. Based on this model, we run a natural field experiment in cooperation with a large European appliance retailer and randomize information regarding the financial benefits of energy-efficient household lighting among more than 640,000 subjects. We find that full information disclosure strongly decreases demand for energy efficiency, while partial information disclosure increases demand. More information reduces social welfare because the increase in consumer surplus is outweighed by the rise in environmental externalities. By randomizing product prices, we identify the optimal tax vector as an alternative policy and show that sizable taxes on energy-inefficient products yield larger welfare gains than any information policy. We also document an important policy interaction: information provision dramatically reduces attention to pecuniary incentives and thereby limits the effectiveness of taxes.","PeriodicalId":54058,"journal":{"name":"EJournal of Tax Research","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76040328","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Organisation for Economic Co-operation and Development (OECD) is in the midst of a project intended to tackle the tax challenges arising from the digitalization of the economy. As initially laid out in its program of work released in May 2019, the goal is to develop consensus on a new taxing right that would allow countries to tax multinationals even in the absence of traditional physical presence. In this paper, the authors argue that upon inspection, the plan seems primarily focused on rebalancing taxing rights mostly among a number of OECD member states plus a few other key non-OECD states, and that, viewed from this perspective, the urgent effort to forge a new global tax deal for the digital age risks deferring a much-needed discussion on the broader distributive implications of the current global tax deal to some unspecified future time. The first part of the paper offers a brief survey of some of the main factors that prompted the OECD to turn its attention to this topic. The second part considers the origins and development of nexus in the international tax regime, showing why this concept is amenable to broad expansion. The third part examines the range of reforms currently under consideration, arguing that the framing on digitalization misses a necessary connection to other pressing international policy programs that are also under development, most notably a global commitment to building institutions that support sustainable economic development. The paper concludes with a prediction that on its current trajectory, the program of work on digitalization is likely to produce a new global tax deal that looks much like the old global tax deal, with a relatively modest redistribution of taxing rights among a few key states, thus missing an opportunity for meaningful reform.
{"title":"A New Global Tax Deal for the Digital Age","authors":"Allison Christians, Tarcísio Diniz Magalhães","doi":"10.2139/ssrn.3480539","DOIUrl":"https://doi.org/10.2139/ssrn.3480539","url":null,"abstract":"The Organisation for Economic Co-operation and Development (OECD) is in the midst of a project intended to tackle the tax challenges arising from the digitalization of the economy. As initially laid out in its program of work released in May 2019, the goal is to develop consensus on a new taxing right that would allow countries to tax multinationals even in the absence of traditional physical presence. In this paper, the authors argue that upon inspection, the plan seems primarily focused on rebalancing taxing rights mostly among a number of OECD member states plus a few other key non-OECD states, and that, viewed from this perspective, the urgent effort to forge a new global tax deal for the digital age risks deferring a much-needed discussion on the broader distributive implications of the current global tax deal to some unspecified future time. The first part of the paper offers a brief survey of some of the main factors that prompted the OECD to turn its attention to this topic. The second part considers the origins and development of nexus in the international tax regime, showing why this concept is amenable to broad expansion. The third part examines the range of reforms currently under consideration, arguing that the framing on digitalization misses a necessary connection to other pressing international policy programs that are also under development, most notably a global commitment to building institutions that support sustainable economic development. The paper concludes with a prediction that on its current trajectory, the program of work on digitalization is likely to produce a new global tax deal that looks much like the old global tax deal, with a relatively modest redistribution of taxing rights among a few key states, thus missing an opportunity for meaningful reform.","PeriodicalId":54058,"journal":{"name":"EJournal of Tax Research","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2019-12-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85758394","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-12-12DOI: 10.1093/ACREFORE/9780190277727.013.134
Taisu Zhang
Up until the final four decades of the Qing Dynasty, fiscal extraction in imperial China was primarily a matter of taxing agricultural production, generally in the form of an annual property tax assessed on the basis of landholding, and collected in either grain or cash. All major dynasties prior to the Qing wielded this fiscal instrument somewhat flexibly, with large-scale reforms, usually leading to significantly higher taxes, occurring around mid-dynasty, but the Qing broke this trend: the absolute volume of agricultural taxes remained locked in place for the great majority of its 278-year life-span, despite a near tripling of both the population and the economy. This eventually rendered the Qing fiscal state an extreme outlier in both horizontal and vertical comparisons: relative to the economy it governed, not only was it much smaller than its major early modern competitors, ranging from Japan to Western European states to other central Asian empires, but it was also probably the smallest post-Qin dynastic state by far. Preexisting scholarship has largely failed to identify, let alone explain, this sudden and dramatic shift in fiscal policy towards the end of China’s imperial history. There are a number of possible explanations for it, some of which have appeared in the preexisting literature, but the most promising one — which has not appeared — seems to be that the extraordinary circumstances of the Ming-Qing transition served as the catalyst for a decisive conservative turn in Chinese fiscal thought, pushing the Qing state into a fundamentally different political and institutional equilibrium than its predecessors.
{"title":"Fiscal Policy and Institutions in Imperial China","authors":"Taisu Zhang","doi":"10.1093/ACREFORE/9780190277727.013.134","DOIUrl":"https://doi.org/10.1093/ACREFORE/9780190277727.013.134","url":null,"abstract":"Up until the final four decades of the Qing Dynasty, fiscal extraction in imperial China was primarily a matter of taxing agricultural production, generally in the form of an annual property tax assessed on the basis of landholding, and collected in either grain or cash. All major dynasties prior to the Qing wielded this fiscal instrument somewhat flexibly, with large-scale reforms, usually leading to significantly higher taxes, occurring around mid-dynasty, but the Qing broke this trend: the absolute volume of agricultural taxes remained locked in place for the great majority of its 278-year life-span, despite a near tripling of both the population and the economy. This eventually rendered the Qing fiscal state an extreme outlier in both horizontal and vertical comparisons: relative to the economy it governed, not only was it much smaller than its major early modern competitors, ranging from Japan to Western European states to other central Asian empires, but it was also probably the smallest post-Qin dynastic state by far. Preexisting scholarship has largely failed to identify, let alone explain, this sudden and dramatic shift in fiscal policy towards the end of China’s imperial history. There are a number of possible explanations for it, some of which have appeared in the preexisting literature, but the most promising one — which has not appeared — seems to be that the extraordinary circumstances of the Ming-Qing transition served as the catalyst for a decisive conservative turn in Chinese fiscal thought, pushing the Qing state into a fundamentally different political and institutional equilibrium than its predecessors.","PeriodicalId":54058,"journal":{"name":"EJournal of Tax Research","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2019-12-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76758400","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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