Abstract

http://ssrn.com/abstract=1647014
 


 



What is Tax Discrimination?


Ruth Mason


University of Virginia School of Law

Michael S. Knoll


University of Pennsylvania Law School; University of Pennsylvania - Real Estate Department


Yale Law Journal, Vol. 121, Pg. 1014, 2012
U of Penn, Inst for Law & Econ Research Paper No. 12-17

Abstract:     
Prohibitions of tax discrimination have long appeared in constitutions, tax treaties, trade treaties and other sources, but despite their ubiquity little agreement exists as to how such provisions should be interpreted. This has led prior commentators to conclude that tax discrimination is an incoherent concept. In this Article, we argue that in common markets, like the European Union and the United States, the best interpretation of the nondiscrimination principle is that it requires what we call “competitive neutrality,” which prevents states from putting residents at a tax-induced competitive advantage or disadvantage relative to nonresidents in securing jobs. We show that, contrary to the prevailing view, maintaining a level playing field between resident and nonresident taxpayers requires neither tax rate harmonization nor equal taxation of residents and nonresidents. Our approach produces simple rules of thumb that provide states and courts with clear direction in writing tax laws and evaluating challenges to those laws.

Number of Pages in PDF File: 104

Keywords: tax discrimination, capital export neutrality, capital import neutrality, capital ownership neutrality, European Court of Justice, Schumacker, Gerritse, de Groot, competitive neutrality

JEL Classification: H20, H24, J61, K34

Accepted Paper Series





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Date posted: March 27, 2011 ; Last revised: April 12, 2012

Suggested Citation

Mason, Ruth and Knoll, Michael S., What is Tax Discrimination?. Yale Law Journal, Vol. 121, Pg. 1014, 2012; U of Penn, Inst for Law & Econ Research Paper No. 12-17. Available at SSRN: http://ssrn.com/abstract=1647014

Contact Information

Ruth Mason (Contact Author)
University of Virginia School of Law ( email )
580 Massie Road
Charlottesville, VA 22903
United States
Michael S. Knoll
University of Pennsylvania Law School ( email )
3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-6190 (Phone)
215-573-2025 (Fax)
University of Pennsylvania - Real Estate Department ( email )
Philadelphia, PA 19104-6330
United States
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