The Rise of Cooperative Surplus Taxation

45 Pages Posted: 9 Sep 2020

See all articles by Allison Christians

Allison Christians

McGill University - Faculty of Law

Tarcísio Diniz Magalhães

University of Antwerp Faculty of Law

Date Written: September 4, 2020


The world’s tax policy leaders are currently engaged in debate over who should tax the income streams produced with the help of cross-border regulatory coordination—the cooperative surplus over the gains that, in a counterfactual world, would be available if investments were confined to the domestic economy. To the extent there ever was a coherent relationship between consensus tax policy norms and the distribution of cooperative surplus, that relationship is now hopelessly skewed by real life factors, chief among them the rapid advancement of innovative technology that transcends physical boundaries of all kinds. The growing dissatisfaction of those on the wrong side of the skew had already initiated a rise in innovative ways to tax cooperative surplus when COVID-19 struck, significantly increasing the stakes for taxation and prompting yet more reform proposals. There are now at least fourteen strategies in play, each drawing varying levels of scrutiny, buy-in, and pushback. This Article examines the fourteen and argues that among them, those seeking to tax revenue flows at source have the best chance to alter the distribution of cooperative surplus in the immediate term, provided some formalistic tropes can be overcome.

Keywords: Taxation; digital economy; platform rent; physical presence; digital services taxes; withholding taxes; evolutionary/evolutive treaty interpretation; ambulatory/dynamic approach; cooperative surplus; tax sovereignty

JEL Classification: H20, F23, F42, K33, K34, O3, O38

Suggested Citation

Christians, Allison and Diniz Magalhães, Tarcísio, The Rise of Cooperative Surplus Taxation (September 4, 2020). Available at SSRN: or

Allison Christians (Contact Author)

McGill University - Faculty of Law ( email )

3644 Peel Street
Montreal H3A 1W9, Quebec H3A 1W9

Tarcísio Diniz Magalhães

University of Antwerp Faculty of Law ( email )

Stadscampus, Venusstraat 23, Office S.V.255
Antwerp, 2000

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