The Use of Neutralities in International Tax Policy

25 Pages Posted: 20 Aug 2014

See all articles by David A. Weisbach

David A. Weisbach

University of Chicago - Law School; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)

Date Written: August 18, 2014

Abstract

This paper analyzes the use of neutrality conditions, such as capital export neutrality, capital import neutrality, capital ownership neutrality, and market neutrality, in international tax policy. Neutralities are not appropriate tools for designing tax policy. They each identify a possible margin where taxation may distort business activities. Because these neutralities cannot be all satisfied simultaneously, however, they do not allow analysts to determine the appropriate trade-offs of these distortions, unlike deadweight loss measures used in other areas of tax policy. International tax policy should instead be tied directly to the reasons for taxing capital income, reasons which are derived from optimal tax or similar models.

Suggested Citation

Weisbach, David, The Use of Neutralities in International Tax Policy (August 18, 2014). University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 697. Available at SSRN: https://ssrn.com/abstract=2482624 or http://dx.doi.org/10.2139/ssrn.2482624

David Weisbach (Contact Author)

University of Chicago - Law School ( email )

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Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP) ( email )

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