42 University of British Columbia Law Review, 331 (2010)
31 Pages Posted: 24 Sep 2010 Last revised: 1 Apr 2012
Date Written: September 23, 2010
Tax is viewed as one of the main vehicles for wealth redistribution. This is why distributive justice is a key consideration in almost any normative discussion of tax policy. Ordinarily, such a discussion is held in the context of national policy, where we would like to think that the national sovereign designs tax rules in an efficient and just manner. It thus seems only natural to discuss questions of global or international distributive justice within the framework of international tax discourse. International tax seems like the obvious place for implementing theories of international distributive justice and international distributive justice may seem like an inevitable theme of international taxation. Yet, the discussion of justice in the context of international tax is not as prevalent as in the case of national-level taxation. This, however, is not a sheer oversight; the discussion of justice in the international setting is not obvious. Applying ideas of distributive justice to the international level requires that we rethink the very conception of distributive justice and adapt it to the global sphere. Indeed, a growing number of scholars are maintaining that principles of distributive justice should have a global purview, thus challenging the traditional (national) discourse of distributive justice.
The scholarship regarding global distributive justice, however, does not incorporate an analysis of international taxation. Yet, international taxation is crucial to understanding the problems as well as the solutions for promoting distributive justice in a globalized world. Accordingly, one of the central aims of this Article is to bridge the gap between political philosophers and international tax experts, to make international tax accessible to the latter as well as to examine the arguments raised in political philosophy discussions in the context of international taxation. To do so, I construct admittedly stylized versions of the stories of international tax competition and tax harmonization, in order to facilitate the important dialogue between scholars of distributive justice and those of international taxation.
Instead of considering the normative question of whether or not international taxation should re-distribute wealth on a global level, this paper analyses and evaluates the redistributive results of the core policies being currently debated in the international tax scholarship: harmonization and tax competition. In so doing it highlights existing mechanisms of international taxation – where countries might not have a strategic self interested reason to participate in some form of global redistribution, and, at the same time, points out the limits of promoting distributive justice through a collaborative effort by individual countries.
The Article begins with a brief presentation of the current debate over the meaning of international distributive justice and the divergent views on this matter. The lack of consensus among political philosophers notwithstanding, distributive justice is often cited in support of certain international tax policies. In particular, it is frequently argued that curtailing international tax competition by harmonizing international tax rules is justified since it will facilitate redistribution. The Article’s discussion will thus proceed to consider the validity of this claim under two competing conceptions of global distributive justice — cosmopolitanism and political justice, and to suggest conditions for truly just harmonization under each such conception. Next, the Article will discuss the challenges faced by redistribution in conditions of decentralization, where countries do not necessarily have an interest in promoting global justice. Finally, the Article will describe two central biases linked with international harmonization: asymmetric negotiations, where developed countries enjoy superior bargaining power over developing countries, and the divergence in the effects of harmonization for various local groups within states, which are biased against labor in developing countries. The Article will conclude with an outline of how a truly just scheme of global harmonization could look like.
Keywords: Distributive Justice, International Taxation, Cosmopolitanism, Political Justice, Harmonization, Tax Competition
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