Tax Competition and Inequality - The Case for Global Tax Governance
Global Governance: A Review of Multilateralism and International Institutions, Vol. 17, 2011
39 Pages Posted: 19 Oct 2009 Last revised: 4 Feb 2011
Date Written: December 13, 2010
In this article I present the normative case for global tax governance. I argue that, contrary to an influential part of the literature, national tax policy choices cause significant externalities for other nation states. Focusing in business taxation, I show that tax competition undermines the integrity and distributive principles of domestic tax systems, and aggravates the inequality between developed and developing countries. Further, I demonstrate that the effects of international tax competition are unjust irrespective of whether a globalist or less demanding internationalist perspective on justice is adopted. The minimum requirement of justice is to devise global rules which ensure that national tax systems remain capable to implement distributive justice as they see fit. Finally, I present and discuss a concrete proposal for the global governance of business tax competition, namely, unitary taxation with formula apportionment.
Keywords: international taxation, tax competition, global justice
JEL Classification: H83
Suggested Citation: Suggested Citation