Report on outsourcing public services to for-profit corporations

I've expressed doubts before about whether it makes sense to turn to private companies to provide public goods, but I missed this paper when it was published last December. Introduction:

Eager for quick cash, state and local governments across America have for decades handed over control of critical public services and assets to corporations that promise to handle them better, faster and cheaper. Unfortunately for taxpayers, not only has outsourcing these services failed to keep this promise, but too often it undermines transparency, accountability, shared prosperity and competition – the underpinnings of democracy itself. As state legislatures soon reconvene, policy makers likely will consider more outsourcing proposals. Out of Control: The Coast-to-Coast Failures of Outsourcing Public Services to For-Profit Corporations serves as a cautionary tale for lawmakers and taxpayers alike. 

Too often, outsourcing means taxpayers have very little say over how tax dollars are spent and no say on actions taken by private companies that control our public services. Outsourcing means taxpayers cannot vote out executives who make decisions that hurt public health and safety. Outsourcing means taxpayers are contractually stuck with a monopoly run by a single corporation – and those contracts often last decades. And outsourcing too often means a race to the bottom for the local economy, as wages and benefits fall while corporate profits rise. 

This report highlights the failed experiences of cities and states across the country that recently experimented with outsourcing in a variety of sectors. Organized by failures in transparency, accountability, shared prosperity and competition, these stories will show how hastily and ill- conceived outsourcing deals fail to protect taxpayers and the public interest. The last section will provide recommendations of responsible contracting practices, including implementation of ITPI’s Taxpayer Empowerment Agenda, which can mitigate the risks of outsourcing and ensure that public dollars are not blindly funneled into corporate coffers, but used to further a communities best interest.

Bartering services is about desperation in the face of labor market failure

Kevin Roose published The Sharing Economy Isn’t About Trust, It’s About Desperation in NY Magazine last week, in response to the Wired Story on How Airbnb and Lyft Finally Got Americans to Trust Each Other. Roose says not so fast:

[T]he sharing economy has succeeded in large part because the real economy has been struggling. A huge precondition for the sharing economy has been a depressed labor market, in which lots of people are trying to fill holes in their income by monetizing their stuff and their labor in creative ways.

He takes a look at labor's share of economic growth and provides a couple of alarming charts...

how many full-time jobs have been replaced by part-time jobs since the recession of 2008:

what's happened to real wages:

Roose concludes:

A narrative about labor-market weakness isn't as uplifting as one about strangers learning to trust enough other with the help of ride-sharing apps. But it's a necessary piece of the puzzle. Tools that help people trust in the kindness of strangers might be the thing pushing hesitant sharing-economy participants over the threshold to adoption. But what's getting them to the threshold in the first place is a damaged economy, and harmful public policy that has forced millions of people to look to odd jobs for sustenance.

Diane Ring on The Influence of Experts

Diane Ring has a post up over at Jotwell reviewing Mai'a Cross' Rethinking Epistemic Communities Twenty Years Later, which was published last year. Professor Ring says:

Rethinking Epistemic Communities emerges from one broad strand of IR theory, cognitivism, which explores how we know what we want, what we value, and what we seek. That is, even if much of international relations activity concerns the use of power and/or bargaining games to secure “desired” outcomes, how do countries and other key actors determine what they want? Certainly in some cases the parameters of what a country seeks to achieve may seem relatively clear, but in many others the outcome or at least its particular form, is less obvious. 

...As Cross articulates, the study of epistemic communities, particularly in the context of transnational global governance highlights how both state actors and the increasingly important non-state actors are affected by epistemic communities and the constructions of norms, goals, and shared understandings. She acknowledges certain criticisms of the concept but sees them not so much as a constraint on further research but rather a road map of the important questions that future scholarship should address.

Head over to jotwell to read the rest.

Recent items of interest on citizenship, immigration, and taxation

• The Times of Monaco: Toward Tax Exemption for French born in Monaco, changes coming in France's citizenship-based tax regime for residents of Monaco
• Patrick Weil: Citizenship, Passports, and the Legal Identity of Americans: Edward Snowden and Others Have a Case in the Courts, lacking the ability to revoke citizenship, the state department is revoking passports instead
• Fulbright Canada blog has a post on its 19th Annual Nineteenth Annual International Studies Symposium, featuring interviews with five of the conference participants, including Arthur Cockfield who spoke on FATCA
• Adam Geller has an AP story on "More renounce citizenship but deny stereotype"--I think that they meant "defy" there
• Victoria Ferauge has posted Two Faces of American Emigration/Expatriation, comparing contrary public consciousness around expatriators Ed Saverin and Tina Turner

Blank on Collateral Compliance

Josh Blank has a new paper available on U.S. tax penalties, which is of broad interest given the increasing role of penalties in corralling a global diaspora into the US tax net. Abstract:

As most of us are aware, noncompliance with the tax law can lead to tax penalties, which almost always take the form of monetary sanctions. But noncompliance with the tax law can have other consequences as well. Collateral sanctions for tax noncompliance—which apply on top of traditional tax penalties to revoke or deny government-provided benefits—increasingly apply to individuals who have failed to obey the tax law. They range from denial of hunting permits to suspension of driver’s licenses to revocation of passports. Further, as the recent Supreme Court case Kawashima v. Holder demonstrates, some individuals who are subject to tax penalties for committing tax offenses involving “fraud or deceit” may even face deportation from the United States. 

When analyzing sanctions as incentives for tax compliance, tax scholars have focused almost exclusively on the design and implementation of monetary penalties. This Article, in contrast, introduces the collateral tax sanction as a new form of tax penalty that does not require noncompliant taxpayers to pay the government money and that does not require a taxing authority to implement it. Drawing on behavioral research and experiments in the tax context and other areas, I argue that collateral tax sanctions can promote voluntary tax compliance more effectively than the threat of additional monetary tax penalties, especially if governments increase public awareness of these sanctions. Governments should therefore embrace collateral tax sanctions as a means of tax enforcement, and taxing authorities should publicize them affirmatively. 

After considering the effects of collateral tax sanctions under the predominant theories of voluntary compliance, I propose principles that governments should consider when designing collateral tax sanctions. These principles suggest, for example, that initiatives to revoke driver’s licenses or professional licenses from individuals who fail to file tax returns or pay outstanding taxes would likely promote tax compliance. However, whether the sanction of deportation for tax offenses involving fraud or deceit will have positive compliance effects is far less certain. Finally, I suggest how taxing authorities should publicize these sanctions to foster voluntary compliance.

The paper includes an interesting, if brief, section entitled "Why do People Pay Taxes" that is of note.

European Commission Seeks Input on Tax Issues of Cross-Border Citizens

The European Commission is seeking consultation through 3 June 2014 on the problems faced by "cross-border citizens."  They desire input from "[a]ll stakeholders – citizens, EU countries, tax administrations, governmental and business organisations, tax practitioners and academics." Some background:

Individuals exercising cross-border activities within the EU are often confronted with different/ additional tax issues compared to individuals who are active only within a single EU country. The issues that can arise may include complex administrative procedures in one or both countries involved that make tax compliance difficult; language barriers; different interpretations of tax treaties by the EU countries involved; difficulties in accessing relevant tax information; and difficulties in identifying officials responsible in national tax administrations. The problems often stem from the fact that two or more EU countries may have the right to tax the income in a cross-border case. Even if procedures exist in theory to prevent double or multiple taxation, the application of those procedures may be very complicated in practice. 

Some EU countries have adopted measures to address these cross-border tax problems. ... 

Although these measures are good, more may need to be done and other countries may still need to take steps in this direction. 

The Commission services are launching this public consultation with a view to inviting all interested parties to contribute to the exercise of providing information on current problems and identifying good practices applied by some EU tax administrations that go some way towards addressing these problems. This will allow the Commission to come up with solutions such as to recommend that all EU countries adopt certain good practices.

You can find links for various types of submissions at the link above.

My favorite part: "Received contributions will be published on the Internet." Yes! Very frustrating when a public consultation ends in the deafening silence of black box decsion-making based on undisclosed inputs. By making this truly public, the EC is providing a data source for researchers that could lead to more creative thinking in the long run. Lessons about the impact of tax issues on intra-European activity from this consultation might help inform our thinking about the taxation of cross border citizens more generally.

Racking Up the Money: RICO and the Revenue Rule

I am pretty sure the Revenue Rule will not survive the current era, so this paper by Kye Handy is of interest. Abstract:

The Revenue Rule, a common law rule from British court systems, prevents foreign countries from bringing claims in the United States to enforce or adjudicate tax claims that did not happen in the United States. The Supreme Court in Pasquantino v. United States held that Canada’s right to collect imported liquor taxes was not barred by the Revenue Rule. However, the 2nd Circuit in European Community v. RJR Nabisco Inc., ruled the European Union and Colombia could not recover lost tax money or enforcement costs from cigarette smuggling under RICO because of the Revenue Rule. The European Community petitioned the Supreme Court. After accepting the Community’s petition, the Court reversed and remanded the case back to the 2nd Circuit to be reheard in light of Pasquantino. The 2nd Circuit did not change its ruling citing Pasquantino as a criminal case brought by the U.S. government. With no distinction between criminal and civil RICO cases in current jurisdiction, this comment seeks to provide a solution to the split between the Second Circuit and the Supreme Court. This comment argues in favor of limitations being placed on the Revenue Rule so that it can never trump RICO claims in United States courts. In the alternative it argues if limitations cannot be placed upon the Revenue Rule then the only option is abolition. Lastly this comment provides that if limitations and abolition are not the answer, then foreign countries should appeal to the United States government to bring the RICO claims on their behalf.

And from the paper:

The Racketeering Influence and Corrupt Organizations Act (RICO) allows foreign countries to bring suit in America for illegal acts committed by American citizens. Unfortunately for these foreign countries, a common law rule denies them the remedies they seek. The Revenue Rule bars foreign RICO claims because of an almost 300 year old doctrine which states that “no country ever takes notice of the revenue laws of another.”

The author calls the rule an "injustice" and suggests it should be limited or abolished; I'd say that 300 years of history suggests there must be some good reason for the limitation, but I applaud the effort to make an argument: it is certainly more than we have seen in the context of FATCA even though it almost goes without saying that FATCA is itself, or at minimum portends, the end of the Revenue Rule as we know it. The comment gives a too-brief overview of the history but at least provides some useful sources; worth a read.

 

Netherlands Bank prohibited from discriminating against "US persons"

Here is an interesting development for FATCA: a case in which a small Dutch bank pre-emptively shuttered the accounts of 150 persons in order to avoid having to fulfill US FATCA information sharing requirements. Of course, as we well know, denying accounts to "US persons" does not exempt anyone or any entity from FATCA, but only saves the cost of annual information gathering and reporting. From the story:

BinckBank N.V. (h.o.d.n. Alex), een beleggingsbank, maakt verboden onderscheid op grond van nationaliteit door een man vanwege zijn Amerikaanse nationaliteit uit te sluiten van zijn dienstverlening.

Which very roughly translates to "BinckBank NV (DBA Alex), an investment bank, may not discriminate on grounds of nationality by denying services to a man with American citizenship."

From the case, again, very roughly translated:

A man with Dutch nationality lived most of his life in the Netherlands. He is a U.S. citizen because he was born in America. That makes him liable to tax in America, as a "U.S. person." The man has an investment account with Alex. ... Following an agreement between the Netherlands and the United States to exchange financial data, the Bank terminated the services of the man and all other (150) U.S. persons on 1 December 2013. In the course of 2014, [a law to implement an IGA with the United States was] submitted to parliament. The aim of the law is to ensure that U.S. persons who live outside of America file their tax returns with the IRS. As of July 1, 2014, Dutch financial institutions must provide information on U.S. persons to the IRS. Alex does not want to comply with the obligation to provide all transaction data by U.S. persons, because to do this, the bank must make significant adaptations to its administrative systems. Given its small number of U.S. person clients, this adaptation would impose disproportionate costs, with additional disclosure services producing a loss-making operation. According to the bank, the discrimination is not banned because it is based on a generally binding regulation. The bank also argues that the discrimination be allowed to continue, because the financial consequences are unacceptable. 

Verdict

The Board for the Protection of Human Rights ruled against BinckBank, finding that terminating service to the man constituted unlawful discrimination on grounds of nationality.

Reasoning

The bank states that U.S. persons can no longer hold accounts. The bank therefore denies its services to people with U.S. citizenship. This is direct discrimination on grounds of nationality. Direct discrimination is prohibited, unless the law makes an exception, such as in a generally binding regulation that compels a distinction. The Board considers that the bank does not oblige the agreement and the law envisaged does not allow for exclusion of individuals with U.S. citizenship. The bank has merely chosen for commercial reasons to deny service to Americans. The Board therefore dismisses the bank's statutory exception. The Board also considers that there is no reason to make the ban on the use of direct discrimination on grounds of nationality. This decision was made on the grounds of reasonableness and fairness.

My informal translator had a little trouble with the last paragraph; suggestions welcome.

From this we can see that small institutions are between a rock and a hard place, at least in the Netherlands and likely many other places as well, but only to the extent that foreign governments employ their human rights regimes to step in and protect Americans from the skewed incentives created by American law. I note that the Netherlands, along with most other IGA partner countries (but not Canada) has included an express provision forbidding discrimination, but this applies only to institutions that are not required to register because they are exempt:

Annex II: Non-Reporting Netherlands Financial Institutions And Products
II. Deemed-Compliant Financial Institutions.
A. Deemed-Compliant Financial Institutions
1. Financial Institutions with a Local Client Base
j) The Financial Institution must not have policies or practices that discriminate against opening or maintaining accounts for individuals who are Specified U.S. Persons and who are residents of the Netherlands.

I had assumed this meant that it would be ok for FIs that are required to comply with FATCA to turn away US customers, as appears to be a growing practice. Not so, if foreign governments can be relied upon to force their own institutions to bear the costs of lending assistance to the United States in perfecting its extraterritorial tax claims, under the mantle of protecting US persons' rights against discrimination in these foreign territories. 

I note that in this case the discrimination claim was mounted by the accountholder to preserve his right to banking services. I await the inevitable barrage of cases that surely must arise as individuals assert other discrimination-based claims in connection with the highly problematic U.S. tax regime.

As a not insignificant aside, it is worrying to me that here we have a foreign court explaining that the purpose of FATCA is "to ensure that U.S. persons who live outside of America file their tax returns with the IRS." I have seen absolutely no evidence that this is the case; I have seen absolutely nothing in any iteration of FATCA to suggest that the idea behind this legislation was to perfect US taxation on those living abroad with US status as citizens or otherwise. Rather, the aim of FATCA was to stop Swiss bankers selling tax evasion to Americans living in America. 

This may seem like an insignificant point but I believe it is important because one day we will look back and reflect upon what will surely turn out to have been a spectacular mistake: that FATCA induced governments around the world into a headlong rush into global automatic information exchange on the strength of an unexamined idea about which taxpayers belong to which countries. One day we are going to have that discussion, and it will need to be remembered that when the world jumped on the FATCA bandwagon, no official in any government apparently considered whether it was right, or good, or just, for the US to impose its income taxation on the basis of legal status. I think when that discussion finally takes place, that omission will be seen as fatal.

In Slovakia, Real Lottery Prize Goes to Tax Man

This is a novel idea, at least, new to me:

Over the last 10 years, Slovakia’s revenue from value-added taxes, a type of sales tax, has declined. But hiring auditors and pursuing individual merchants and service providers in court is expensive and slow. So last fall, the government decided to put a lottery in the mix.

The idea is to enlist average citizens to collect receipts from their purchases and register them with the government, creating a paper trail for transactions and forcing restaurant and shop owners to pay the sales taxes they owe. As Slovakians register their receipts for the lottery, a computer will also tell them if a merchant has issued a receipt with a fake tax identification number, so they can report suspected fraud. 

For any purchase worth more than 1 euro, or about $1.38, Slovakians can enter their receipts in a monthly lottery to win €10,000, a car or a chance to be a contestant on the Slovakian version of “The Price Is Right.” 

Tax officials say the lottery is already having a big impact, and other European countries that are also struggling with the collection of value-added taxes have considered it — including Portugal, which started its own tax lottery on Thursday. In Slovakia, about 450,000 people have taken part, registering about 60 million receipts, officials said. 

As we well know, third party reporting is an excellent way to induce honesty in taxpayers. Winning a lottery is a long shot but its very existence promotes a certain culture to develop around the reporting of taxable sales. And the winners make for good tv.

Webcourse on Cayman Islands

Andrew Morriss presents a webcourse of interest, starting May 5. The objective:

"explore the rich history of the islands and talk to local experts about the institutional, legal, and regulatory frameworks, predicated on property rights and a rule of law, that led to this mass wealth creation and complete economic transformation in only 20 short years."

Professor Morriss wrote up his research with Tony Freyer on how the Caymans became an offshore financial center, which I posted and discussed briefly here. That paper pushed buttons and I am sure the webcourse will do the same, as the international taxation landscape is undergoing some serious growing pains of late and governments around the world are reconsidering the promises and perils of regulating behavior in a globally integrated economy.

From the NYT: Lessons for International Tax from Oregon's Role as Sales/Use Tax Haven

Today's NYT has an article entitled "Buyers Find Tax Break on Art: Let it Hang Awhile in Oregon." The artful dodge is accomplished via simple arbitrage between a source, an intermediary, and a residence jurisdiction, so the story gives a nice illustration of a phenomenon we see play out on the international stage every day, only we have generally been taught to associate tax avoidance arbitrage with the likes of GE, Google, Apple, etc. Here is the simple pattern:

1. The collector lives in state A (the residence state)--in this example, California. 
2. The collector buys an expensive work of art in state B (the source state), in this case, New York. As the source state, state B could extract a tax purely on the occurrence of the sale, but chooses not to, rather basing its sales tax on place of use. 
3. State A generally imposes use taxes on items purchased from outside the state and brought into the state (this is to treat external sales the same as internal ones, which would be subject to sales taxes). But there is an exception: if an item is "used" in another state first, it is not subject to the use tax when it finally makes its way to state A.
4. To avoid the use tax, the collector can't keep the item in state B because then state B's sales tax will apply.
5. In comes state C, with no sales or use tax, in this case, Oregon. State C is a safe haven. Collector parks the asset in state C long enough to satisfy the residence state's exemption. 
6. Hey presto, neither sales nor use tax. 

Nothing illegal has occurred, as the NYT is very quick to point out. But it is also clear that this is a story for a reason, and the reason suggested by the headline is this outcome produces unfairness. 

After all, these are rich people dodging around helpless tax states with the help of sophisticated tax planners. This seems worth examining further given the parallels to corporate social responsibility and international tax planning à la Caterpillar as we have seen recently in the news, and in light of the actions of some states to try to curb international tax planning ... and please do not let it escape notice that this list includes Oregon. 

Let's identify a few problems and a few solutions in the overall tax regime created by the conflicting rules in the three independent states as suggested above. The problems seem to be:

1. residents of state A will likely object that it is not fair for state A to tax sales occurring in the state and not sales occurring outside the state (violates horizontal equity).
2. some residents of state A will likely object that it is not smart to tax sales occurring in the state and not sales occurring outside the state (people will react accordingly and the sales tax base will disappear). 
3. on the other hand, some residents of state A will argue it is smart to do this because it means more people will buy nice things and ultimately bring them into the state C, causing other spillover benefits in the long run. (If so we should question why state A has a use tax at all.)
4. state A cannot control either state B or state C but unless strict capital or other regulatory controls are applied against state A's population, state A's rules necessarily interact with B and C.
5. residents of state B might object that it is not fair for state B to tax sales only if the assets purchased stay in the state and not if they leave the state (violates horizontal equity)
6. on the other hand residents of state B will likely view it as smart for state B to tax sales only if the assets purchased stay in the state and not if they leave the state, because then more sales will occur in state B and with those sales come jobs and other spillover benefits.
7. state C just doesn't tax these things and so would seem to be neutral, acting without fault in the arbitrage.
8. state C residents likely view this neutrality as smart because the state benefits by facilitating the arbitrage between states A and B, and it can be expected to defend this benefit.
9. but what is smart for either states B or C or both creates an unqualifiedly unfair situation in state A.

So much for the problems. Are there solutions?  Again the illustration is enlightening.

1. A, B, and C could get together and demand a federal regulation to stop the arbitrage amongst the states. They could, but they won't (cooperation fails).
2. State A could threaten states B and C to stop facilitating the arbitrage or else (coercion). But what, exactly, does state A want? Does it want to force state B to tax on the basis of source? Does it want state C to tax as the conduit? Either of those would produce fairness in that the individuals would pay tax somewhere, but in neither case would it be state A collecting the tax. Also, depending on state C's political, economic, and social power relative to state A, the strategy could yield results, or not; certainly if harsh tactics are used, state A will be resented by its neighbors, and for what? No revenue, but a globally fairer system that neither B nor C wanted.
3. State A could change its own law to repeal the first use rule, which would eliminate the benefit of the arbitrage. No more icing on the cake per the collector routing through Oregon. (when people say tax planning is icing on the cake as the person did in this article, I picture a tiny cake with a tower of icing. So much icing that by the time you eat it all, there isn't any room for cake. But I digress.)

Now does it not seem that state A has the most power to fix the situation if it chooses to change its own law to nullify the arbitrage? Is this not what Oregon and other states are doing vis à vis the foreign earnings of state-registered companies?

This is what I am talking about when I say that tax avoidance is as much a supply side as a demand side problem. We can blame states B and C all day long for facilitating tax avoidance. But State A often holds the power to solve the problem itself. If state A does not do that, then we should be looking at why state A does not do that rather than why state B or state C stand by and allow or encourage and benefit from the arbitrage. Are democratic decisions being made to ignore the fairness problem in order to achieve a solution some people in state A consider to be smart, and if they are doing so, who are those people who think this is smart and have the people in state A who do not think it is so smart been allowed access to lawmaking in the same manner and capacity of those who do think it is smart?

Note that in this case there is no discussion about the problem of information asymmetry--that is, we are not looking at state B or C hiding the fact of the sale from state A. That is a different problem which state A might not be able to solve on its own (actually I believe it could but that is another story). But in terms of legal tax avoidance, I think this story is a wonderful illustration of the argument I often make, for example here and here, about who we should be looking to when facilitating legal tax avoidance becomes the central defining characteristic of a tax regime created by the interaction of multiple jurisdictions.

Thanks, New York Times, for inadvertently covering international tax policy in a fun story with pictures and even a graphic.

Call for Papers: Tax Justice & Human Rights Symposium, McGill, June 2014

We invite paper proposals for a Tax Justice and Human Rights Research Collaboration Symposium, to be held at the McGill Faculty of Law, Montreal, Quebec, from Wednesday to Friday, 18-20 June 2014.

The symposium will explore the fundamental connections between taxation and human rights by providing a forum for collaboration among students/emerging scholars, academics, civil society organization representatives, tax justice advocacy groups, tax policy makers, and researchers from around the world. The symposium seeks especially to bring developing-world perspectives into the discourse and to foster scholarly work for dissemination both within and beyond the academic setting.

The plurality of experience, in terms of training, background, country of origin, and area of expertise, will ensure that discussions and activities at the conference will have real-world impact. Indeed, there is a need within the tax-policy world for more cross-pollination between academic researchers and on-the-ground decision-makers. The connections and networking that we envision will take place at this conference should allow for meaningful discussions for years to come.

Paper proposals must be between 300-500 words in length and should be accompanied by a short résumé.

Please submit your proposal to the conference convener Professor Allison Christians, at [allison dot christians at mcgill dot ca].

Deadline for submissions: 30 April 2014. Successful applicants will be notified in early May 2014.

An initial 3-5 page sketch of the paper must be submitted by the end of May for circulation among panelists and feedback from the conference committee, but completed papers are not required; rather, we seek a readiness to collaborate and develop new heuristics for thinking about taxation and human rights. 

Conference fees for presenters will be covered by the conference organizers; travel and accommodation bursaries may be available to scholars and tax justice advocates from the Global South in connection with support from the Tax Justice Network, Canadians for Tax Fairness, Halifax Initiative, and other partners.

Please visit the Symposium's page on the Stikeman Chair in Tax Law website for more information. 

Avoidance, Evasion, and Taxpayer Morality

In light of the current sacrificing of Caterpillar on the altar of political posturing by lawmakers who are ultimately responsible for designing a global system that ensures US multinationals a world of tax-favorable opportunities, my latest SSRN post, Avoidance, Evasion and Taxpayer Morality appears à propos. It explores the difficult terrain we traverse when, confronted with the parade of household names apparently paying little or no taxes anywhere, we start talking about ethics and morality instead of law. Abstract:

In popular discourse, tax evasion by wealthy individuals is conflated with tax avoidance by multinational corporations to tell a single story about tax dodging and its negative impact on society. But conflating avoidance and evasion muddies the tax policy waters in important ways by turning legal obligations into moral ones. This Essay, prepared in connection with the Washington University School of Law colloquium on “Conceptualizing a New Institutional Framework for International Taxation,” makes the case for caution in using morality as a stop-gap measure to avoid drawing a regulated line between tax evasion and tax avoidance, while still meting out punishment within the undefined space between these two poles. It acknowledges the political gains derived from the rhetoric of morality but argues that the alternate view — that taxpayer behavior must ultimately be managed by law rather than social sanction — has the best chance of driving tax policy toward greater coherence in the long run because it makes the best case for more transparency in both lawmaking and the consequences of legislative decisions.

As always I welcome comments.