Fairness in International Taxation: The Ability-to-Pay Case for Taxing Worldwide Income

29 Pages Posted: 17 Oct 2007

See all articles by J. Clifton Fleming

J. Clifton Fleming

Brigham Young University - J. Reuben Clark Law School

Robert J. Peroni

University of Texas at Austin - School of Law

Stephen E. Shay

Harvard Law School

Abstract

Although the ability-to-pay fairness principle is a foundational element of American income tax policy, it has played a surprisingly small role in evaluating the U.S. international income tax regime. Perhaps this is because the application of the ability-to-pay concept to international income taxation is complicated by the presence of foreign taxpayers, by income earned through C corporations and by the claims of other governments to tax cross-border income. Nevertheless, it is possible, and indeed essential, to analyze international tax policy in terms of fairness. In this article, we extensively explore the international dimension of the ability-to-pay norm. We argue that this fairness criterion supports the conclusion that taxing worldwide income and ending the deferral privilege provides a tax regime that is superior to either the current U.S. international income tax system or the adoption of an exemption system.

Keywords: International Taxation, Taxation, International, Fairness, Equity

Suggested Citation

Fleming, J. Clifton and Peroni, Robert Joseph and Shay, Stephen E., Fairness in International Taxation: The Ability-to-Pay Case for Taxing Worldwide Income. Florida Tax Review, Vol. 5, No. 4, 2001. Available at SSRN: https://ssrn.com/abstract=1022099

J. Clifton Fleming

Brigham Young University - J. Reuben Clark Law School ( email )

430 JRCB
Brigham Young University
Provo, UT 84602
United States

Robert Joseph Peroni (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

Stephen E. Shay

Harvard Law School ( email )

1563 Manssachusetts Avenue
Cambridge, MA 02138
United States

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