The Virtuous and Vicious Cycles of Tax Law and Development

Last week, the World Bank released a Conference Report detailing the inaugural meeting of the platform for collaboration on tax, which took place in February 2018 under the theme of Taxation and the Sustainable Development Goals. The conference report outlines four "pathways" of connection between tax and sustainable development:

1. taxes generate the funds that finance government activities in support of the SDGs;
2. taxation affects equity and economic growth;
3. taxes influence people’s behavior and choices, with implications for health outcomes, gender equity, and the environment; and,
4. fair and equitable taxation promotes taxpayer trust in government and strengthens social contracts that underpin development.

I don't disagree with these but in my view the international tax system is pretty much in perfect conflict with the sustainable development goals because of the way it allocates profit across jurisdictions. My paper on value creation with Laurens van Apeldoorn explored this and I continue to explore it, will have a new paper soon detailing what I consider a major part of the mischief and my proposed response. As part of that paper I diagram the virtuous and vicious cycles of tax and development, as follows:

And then I diagram what turns a virtuous into a vicious cycle as follows:

Every system experiences fissures, but where there is extreme lack of development, fissures seem to dominate and perpetuate a vicious cycle instead of contributing to a virtuous one. I think these visuals generally track with the messages from the conference report but in my view the connection between tax and development goes well beyond revenue collection, so we need to think well beyond tax evasion and tax avoidance when we are thinking about how to align these broad international systems and goals.

That said, the report labels me as presenting "the most radical suggestion" at that conference. I found the video online and excerpted my part; what I said doesn't sound all that radical to me, one year later:

More on this to come soon.

Today at McGill: Law and the Blockchain: A Crash Course

A full house expected for today's event, but it's not too late to join us if you're in Montreal!

100 Years of Tax Law in Canada

2017 marks the 100^th anniversary of Canada’s federal income tax. In commemoration of this milestone, a half-day symposium will be conducted in conjunction with the Spiegel Sohmer Colloquium on 2 October 2017. The goal of this symposium is to explore the evolution of tax law and policy in Canada over the past century. The symposium will feature a keynote by Kim Brooks followed by two roundtable discussions in which experts confer on some of the key themes of tax law and policy development in Canada. The symposium will conclude with a cocktail reception to celebrate 100 years of federal income tax in Canada.

Symposium Participants:

Kim Brooks, Professor of Law, Dalhousie University. Prof. Brooks is an internationally recognized tax scholar who has written multiple scholarly works on taxation in Canada and beyond.

Jakub Adamski, lecturer in business associations and contract law at McGill Faculty of Law. He runs a seminar on the history and development of corporate law with Marc Barbeau, with whom he is co-authoring a text on the subject.

Marc Barbeau, adjunct professor of corporate and securities law at McGill Faculty of Law and partner, Stikeman Elliott. Me. Barbeau practices in the areas of mergers and acquisitions, complex reorganizations and corporate governance. He runs a seminar on the history and development of corporate law with Jakub Adamski, with whom he is co-authoring a text on the subject.

Scott Wilkie, partner, Blake’s, and Distinguished Professor of Practice at Osgoode Hall Law School, York University. Mr. Wilkie is recognized as a leading corporate tax lawyer in Canada and has extensive experience in national and international corporate tax practice.

Colin Campbell, Associate Professor, University of Western Ontario. Prof. Campbell was a senior partner in the Toronto office of Davies Ward Phillips & Vineberg LLP until mid-2010 when he took up a position at UWO to teach and undertake research on Canadian tax history.

Lyne Latulippe, Professeure agrégée, École de gestion, Université de Sherbrooke. Prof. Latulippe’s work on the institutional aspects of international taxation development and the conduct of professional tax advisors is widely recognized and influential.

Robert Raizenne, adjunct professor of tax law at McGill Faculty of Law and partner, Osler, Hoskin & Harcourt LLP. Me. Raizenne has extensive experience in a wide variety of tax matters and is a sought-after speaker and writer on national and international tax topics.

This event is free and open to the public.

Corporate Tax for the 21st Century

I'm in Oxford today for the Said Business School's annual summer conference, staying for the academic conference the remainder of the week. Here is today's program; see comments on twitter with #ct21

09:00-09:30
09:30-11:30	The need for reform, and current policy proposals Michael Devereux, Oxford University Centre for Business Taxation Welcome and introduction Chair: John Vella, Oxford University Centre for Business Taxation Michael Graetz, Columbia University and Yale University The need for reform Michael Devereux, Oxford University Centre for Business Taxation Principles for reform Wolfgang Schön, Max Planck Institute for Tax Law and Public Finance, Munich Reforms on the current political agenda Reuven Avi-Yonah, University of Michigan Valeska Gronert, European Commission Discussion
11:30-12:00	Coffee
12:00-13:30	Residual Profit Allocation Proposal Chair: Wolfgang Schön, Max Planck Institute for Tax Law and Public Finance, Munich Paul Oosterhuis, Skadden Arps LLP Michael Keen, International Monetary Fund Jennifer Blouin, Wharton Business School, University of Pennsylvania Steve Edge, Slaughter and May Discussion
13:30-14:30	Lunch
14:30-15:45	Destination Based Cash Flow Tax Proposal, and developing countries Chair: Judith Freedman, University of Oxford Michael Devereux, Oxford University Centre for Business Taxation Rachel Griffith, Institute for Fiscal Studies and University of Manchester Malcolm Gammie QC, One Essex Court Discussion
15:45-16:15	Coffee
16:15-17:30	Panel Discussion Chair: Michael Devereux, Oxford University Centre for Business Taxation (Chair) Ian Brimicombe, AstraZeneca Plc Alex Cobham, Tax Justice Network Michael Graetz, Columbia University and Yale University Rt Hon Dame Margaret Hodge MBE MP, House of Commons Vanessa Houlder, Financial Times John Kay, Financial Times

Call for expressions of interest: Moot court on international taxation of digital services

I will be presiding over a moot at the annual conference of the International Fiscal Association this fall in Madrid. The topic as described below is vague, but suffice to say that recent news stories are driving (ahem) the topic forward. The moot is now open to expressions of interest by prospective participants who meet the eligibility requirements described below. Here is the info:

Young IFA Network Moot Court – Madrid, September 28, 2016 Expressions of Interest due June 15, 2016

All members of the Young IFA Network are invited to submit an expression of interest as a moot court speaker at the YIN Moot Court during the 70th Congress of the International Fiscal Association in Madrid, Spain.

YIN at IFA

During recent Congresses in Amsterdam, Kyoto, Brussels, Vancouver, Rome, Paris, Boston, Copenhagen, Mumbai and Basel, the Young IFA Network (YIN) organised a Moot Court.

YIN Moot Court Format

The YIN Moot Court will be held at the Conference Venue on Wednesday, September 28, 2016 from 3:15 pm to 4:45 pm. An acting Tax Judge (Allison Christians, Canada) will preside over a hypothetical tax case relating to digital services to be argued by young tax academics or professionals, one side representing the Tax Authorities and the other side representing the Taxpayer. At the end of the arguments, the acting Tax Judge will render her judgment on the tax case. The fact pattern for the case, the legal issues involved, and a summary of the case will be made available to the delegates before the start of the Moot Court.

Expression of Interest for Speakers at the Moot Court

YIN members that are interested in being one of the speakers at the Moot Court are asked to express their interest to Sanjay Iyer (sanjay@iyerpractice.com) on or before June 15, 2016 along with a brief profile/CV that shall assist the Committee in the selection of the speaker. Eligibility requirements: 1.     YIN Member of an IFA branch 2.     40 years of age or below 3.     Registered for the 2016 Congress in Madrid, Spain.

What does it mean to implement BEPS?

Today I took part in a panel discussing the topic of "Life After BEPS," at which I laid out the three categories of BEPS commitments in three slides. These categories are "minimum standards" (there are four), "recommendations" (there are several) and "best practices" (there are many). These are defined terms in BEPS world but it is already fascinating that there is some category blurring going on in the discourse surrounding implementation. I'm interested in that blurring because of course we are in the midst of a major cycle of law- and norm-making in international tax, and "what countries actually agreed upon" is really going to matter pretty soon, as the difference between convergence and divergence depends on a meeting of the minds at the level of rulemaking. This will play out through conflict and resolution at the domestic and international level in the form of both hard law (multilateral and bilateral agreements and domestic law changes) and soft law (OECD models, guidelines, and peer monitoring). In case they are of interest, I thought I would post my three slides here.

Tax Coop 2016: "Winning the Tax Wars" May 23-24

Tax Coop and the World Bank are hosting a conference on tax competition and cooperation to be held in Washington DC on May 23-24. As last year, I've constructed the debate, which this year will be livestreamed on May 23 at 16:15 EST.  I'll post the link when I have that information. At last year's conference, Dan Mitchell (Cato) and Richard Murphy (TJN) put corporate taxation on trial, debating the continuing viability of this tax in the face of technological innovation and economic globalization. This year's debaters are Alison Holder of ActionAid and Veronique de Rugy of the Mercatus Center at George Mason University.

They will debate the following:

What’s Better for Developing Countries: 

Tax Competition or Tax Cooperation?

This question will be explored through a series of three resolutions, as follows:

1. First, be it resolved that: tax competition harms developing countries by reducing their capability to raise fiscal revenue to finance physical and social infrastructure needed for economic growth and social inclusion.
2. Second, be it resolved that: tax competition increases developing countries’ reliance on foreign aid, making them more vulnerable to aid volatility. 
3. Third, be it resolved that: tax competition aggravates existing income disparities between developed and developing countries.

Arguing the “affirming side” of each resolution will be Alison Holder of ActionAid. Arguing the “opposing side” of each resolution will be Veronique de Rugy of the Mercatus Center at George Mason University. Evidence from all jurisdictions will be admissible. The emphasis will be on persuasive, clear, and logical argumentation. The debate will proceed in four rounds and will be moderated and judged by Louise Otis of McGill University and Jay Rosengard of Harvard University. Last year's debate was definitely a highlight of the conference and I look forward to hosting Ms. Holder and Ms. DeRugy for this year's event. 

The full conference program features a slate of distinguished speakers from around the world and across public, private, and academic sectors.  Registration is free; additional program and speaker information available here and you can follow @taxCoop on twitter for updates and links. 

This Friday in London: Conference on The Changing Shape of Tax Avoidance

This Friday, I'll be in London participating in a conference on tax avoidance and evasion, hosted by the Journal of Tax Administration. Here is the program:

11.00 – 11.15 Welcome and Introduction

11.15 – 11.50 Matthew Rablen: Optimal Income Tax Enforcement in the Presence of Tax Avoidance

11.50 – 12.25 Maya Forstater: Can Stopping ‘Tax Dodging’ by Multinational Enterprises Close the Gap in Development Finance?

12.25 – 13.00 Allison Christians: Tax Avoidance in a World of Aggressive Tax States

13.00 – 13.45 Lunch

13.45 – 14.15 Federica Bardini: The “Ius Commune Europeum” on Tax Avoidance

14.15 - 14.45 Shu-Chien Chen: The Common Pattern of the “Tax Avoidance Concept” in the EU and USA

14.45 – 15.00 Discussion

15.00 – 15.20 Break

15.20 – 15.55 David Duff: Tax Avoidance – Causes, Consequences and Responses

15.55 – 16.30 David Quentin: Tax Risk Mining and Corporate Responsibility for Human Rights

The venue for this conference is Friends House, 173 – 177 Euston Road, London.

Here is the abstract for my presentation:

Tax Avoidance in a World of Aggressive Tax States 

Media coverage of tax “dodging” by high profile elites and multinational companies leads the public to believe that tax avoidance happens when individuals act to thwart the efforts of the state. Confined to the domestic arena this may be an apt description, and a problem anti-avoidance regimes are designed to solve. But on an international scale, tax avoidance is not a one-person show. Instead, it involves interactions among four types of actors: individuals, home states, host states, and intermediary states. International tax avoidance persists largely because home, host, and intermediary states intentionally use their tax systems to lure investment away from other jurisdictions that impose higher tax burdens, and individuals do their best to exploit available opportunities to the fullest. In deciding whether and how law should be used to prevent international tax avoidance, the goals and interests of each of the four actors must be examined.

May 4: International Tax Governance in Action at Tilburg University

Next week, I will be participating in a workshop at Tilburg University in the Netherlands on the topic of International Tax Governance, a timely topic especially given the recent developments in the coordination of the international organizations, the expansion of the OECD's global forum idea to monitor BEPS, the impact of the state aid cases within and beyond Europe, and the increasing role of NGOs in shaping international tax policy. Here is the program:

10:00- 10:30	Welcome and registration
10:30- 11:00	Opening
	Cees Peters (Tilburg University): International Tax Governance in Action
11:00- 12:30	Session 1 - Transparency
	Edwin Visser (PwC): reaction of MNC's to transparency pressure: CbCR and CSR discussion (30 minutes + 15 minutes discussion)
	Maaike van Diepen (Tax Justice Network): The perspective of an NGO (30 minutes + 15 minutes discussion)
12:30- 13:30	Lunch break
13:30- 15:00	Session 2 - EU State Aid
	Allison Christians (McGill University): a US perspective - the reaction of the US government and US MNC's
	Anna Gunn (Leiden University): an EU perspective - the reaction of the EU Member States and EU MNC's
15:00- 15:30	Break
15:30- 17:00	Session 3 - Compliance of states with new norms of international taxation
	Carla De Pietro (Tilburg University and University of Bologna): Implementation of the OECD BEPS measures (Action 6) in the light of the relationship between international and EU law.

More details and registration information are here.

Tax Cooperation and Competition Conference tomorrow in Montreal

Tax Coop Montreal will be taking place tomorrow at the Musee des Beaux Arts in Montreal. It promises to be an action-packed day. Here is the conference program:

8:30-9:00 Welcome and Registration
9:00 - 09:10 Opening Remarks
9:10 - 10:15 COMPETITION AND TAXATION: A LOOK AT THE LANDSCAPE: Katharina Becker,  Allison Christians,  Peter Dietsch and Lyne Latulippe
10:15 - 10:40 TAX COMPETITION AMID ASYMMETRICAL INFORMATION: Elise J. Bean
10:40 Break11:00 - 11:40 COMPETING WHEN YOUR COMPETITORS DON’T PAY TAX. INSIDERS’ VIEW: Steven Adams,  Tasso Lagios and Natalie St-Pierre
11:40 - 12:30 FROM GLOBAL TO LOCAL TAX COMPETITION: WHEN TAX COMPETITION HITS CLOSE TO HOME: Governor Sam Brownback,  Blanca Moreno-Dodson and Paul Waldie
12:30 Lunch14:00 - 14:35 THE OECD’S BEPS PROJECT UPDATE: Pascal Saint-Amans
14:35 - 15:10  IT’S LEGAL, BUT IS IT MORAL? TAX MORALITY AND ITS LIMITS: Brian J. Arnold,  Alison Holder and Jean-Pierre Vidal
15:10 - 16:00 OPINION LEADERS WHO HAVE MADE A DIFFERENCE: Brigitte Alepin,  Margaret Hodge and Lee Sheppard
16:00 Break16:30 - 17:45 CORPORATE TAX ON TRIAL: Dan Mitchell and Richard Murphy go head to head: Moderated by  Louise Otis and Jay K. Rosengard.
17:45 - 20:00 Closing Cocktail: Toward Tax Coop 2016

Global Justice Post-2015

The Global Justice Program at Yale University is currently hosting a conference exploring the post-2015 agenda for human rights and global justice. List of speakers and topics:

Day One: October 30 

Panel 1: Global Tax Fairness: Allison Christians, Manuel Montes, Erika Siu; Chair: Zorka Milin)  

Amartya Sen Prize Contest Ceremony 

Panel 2: Illicit financial flows, human rights and the post-2015 agenda - Discussion of Independent Expert’s Report: Juan Pablo Bohoslavsky, Nicholas Lusiani, Léonce Ndikumana, Esther Shubert; Chair: Tom Cardamon 

Panel 3: Addis, Post-2015, and future efforts against Illicit Financial Flows: Tom Cardamone, Steven Dean, Gail Hurley and Jakob Schwab; Chair: Laura Biron 

Day Two: October 31  

Statement of the Health Impact Fund (HIF) and mini-HIF, including discussion: Aidan Hollis, Thomas Pogge; Chair: Alex Sayegh  

Panel 4: Mini-HIF: Piloting the Health Impact Fund: Laura Biron, Aidan Hollis, Peter Maybarduk, Thomas Pogge, Jeffrey Sachs, Richard Wilder; Chair: Tendayi Bloom
Concluding Session on the Health Impact Fund  

Panel 5: Individual Deprivation Measure, Poverty Measurement: Sharon Bessell, Thomas Pogge, Scott Wisor; Chair: Yuan Yuan. 

Day Three: November 1  

Panel 6: Oslo Principles on Climate Change Obligations: Thomas Pogge, Jaap Spier, Kira Vinke; Chair: Shmulik Nili 

Panel 7: Sustainable Development Goals (Daniel Esty, Thomas Pogge, Jeffrey Sachs; Chair: Corinna Mieth.

I presented yesterday on the topic of "Global Tax Fairness." I discussed the connection between taxation and human rights, highlighting the challenges for the realization of rights and justice that are posed by tax competition and exploring whether and how systemic change is possible. I have a couple of works in progress on the topic and will post drafts when ready.

In the meantime, I'm experimenting with making my powerpoint presentations available online (along with other resources in the future). You can view a list here: see pull down menu entitled "resources". Comments and suggestions are welcome.

Reconsidering the Tax Treaty: Brooklyn Law Symposium

I'm very pleased to participate in Brooklyn Law School's annual international tax symposium today. This year's theme is Reconsidering the Tax Treaty: a timely topic given the OECD's release of the BEPS Reports, especially Action 6, and the US Treasury's release of proposed new Model Provisions.

My working paper looks at these developments, with a specific focus on the proposed "special tax regimes" and "subsequent changes in law" switch off clauses--in effect, two built-in mini-override provisions. Mine is truly a work in progress and not ready for distribution yet but here is the basic framework:

Seeing STRs: A New Vision for Tax Treaties?

The new US Model treaty contains several new provisions designed to address treaty abuses, in line with the ongoing OECD initiative to counter base erosion and profit shifting (BEPS). Among these are two dealing with foreign law. The first denies treaty withholding rates on interest, royalties, and other income to taxpayers eligible for “special tax regimes” (STRs) in the treaty partner country. The second completely switches off the treaty withholding rates for all recipients of passive income items in prescribed situations where the partner country reduces its tax rate below 15%. The STR provision is limited in scope to taxpayers who receive special deals, but the subsequent law provision partially terminates the treaty as to every taxpayer (ostensibly in both countries) even if they do not benefit from the targeted regime. Both provisions seem designed to enact a new central purpose for tax treaties, namely, as peer-monitoring devices to create a world in which cross border capital flows are subject to at least a single level of tax, at a minimum tax rate. This article examines the international precedents for the new provisions and their implications for international tax relations going forward. It concludes with a discussion about the role tax treaties can and should play in curtailing tax competition among nations.

As always I welcome comments; will post a draft when ready.

Mitchell. Murphy. Head to Head Nov 3 in Montreal: Corporate Tax on Trial

On Nov 3, there will be a big conference in Montreal on the topic of tax cooperation and competition with presentations by political, business, and academic leaders from around the world; program at the link and I'll post more info soon. A highlight of the day will be a formal debate between Dan Mitchell of the Cato Institute and Richard Murphy of Tax Research UK, on the topic of corporate taxation: continue it, change it, abolish it? These two titans will debate three resolutions:

1. First, be it resolved that: the current approach to corporate taxation is a necessary and appropriate means of raising tax revenue.
2. Second, be it resolved that: corporate taxation is fundamental to preserve personal taxation.
3. Third, be it resolved that: To the extent that governments tax corporate income, they should do so comprehensively, and not use tax incentives to favour selected types of investment or commerce.

It likely goes without saying that arguing on the “affirming side” of each resolution will be Richard Murphy; arguing on the “opposing side” of each resolution will be Dan Mitchell; the debaters are free to interpret the resolutions broadly and form their arguments accordingly. Evidence from all jurisdictions will be admissible. The debate will be moderated and judged by two eminent judges: Louise Otis (OECD Admin Tribunal & McGill Law) and Jay Rosengard (Harvard Kennedy School of Business). The emphasis will be on persuasive, clear and logical argumentation. This promises to be a lively debate. Registration information for the conference is here.

Taxation and Citizenship Workshop at U Michigan

This week at the University of Michigan Law School, Reuven Avi-Yonah and I are co-hosting an academic workshop on the topic of citizenship and taxation. Because it is a workshop, most of the papers are still in draft and won't be publicly available for some time. However, we will be doing a writeup of the proceedings and I'll post that when it is available, and of course I'll post when the symposium volume is published. Here are the speakers and topics:

• Reuven Avi-Yonah (Michigan) Constructive Unilateralism : US Leadership and International Taxation 
• Allison Christians (McGill) Uncle Sam Wants … Who? 
• Wei Cui (UBC) Residence and Source as Interconnected Concepts 
• Tessa Davis (South Carolina) Of Tax Crimes and “Bad” Citizens: How the Role of Tax Law in Making a Citizen Informs Tax Law and Policy 
• Jane Frecknall-Hughes (Hull) Tax and the citizen: the philosophical underpinnings 
• Christine Harlen (Leeds) Making America Exceptional: Perfectionist Civic Republicanism and the Taxation of Americans Abroad in the Progressive Era, 1890-1920 
• Michael Kirsch (Notre Dame) The Taxation (or Non-Taxation) of Citizens’ Foreign Income: Distilling the Competing Normative Arguments 
• Sagit Leviner (Ono) Citizenship Transcendent 
• Patrick Martin (Procopio) Tax Simplification: The Need for Consistent Tax Treatment of All Individuals (Citizens, Lawful Permanent Residents, and Non-Citizens regardless of immigrant status) Residing Overseas, Including the Repeal of U.S. Citizenship Based Taxation 
• Ruth Mason (Virginia) Citizenship Taxation 
• Linneu Mello (Bichara) How the Brazilian Tax Authorities Control Information and What FATCA Has To Do With It 
• Henry Ordower (St. Louis) Is the Expatriation Tax Constitutional? Mark to Market and the Macomber Conundrum 
• Adam Rosenzweig (Washington St. Louis) Once a US Person, Always a US Person 
• Daniel Shaviro (NYU) Taxing Potential Community Members’ Foreign Source Income 
• Peter Spiro (Temple) Citizenship Overreach and the U.S. Tax Regime 
• Saul Templeton (Calgary) Bill C-51, FATCA, and the End of Taxpayer Privacy 
• Edward Zelinsky (Cardozo) The Problems of Defining Residence: The U.S. Experience

Student Panel

• Montano Cabezas (Georgetown) Reasons for Citizenship-Based Taxation? 
• Christine Kim (NYU) Considering “Citizenship Taxation” : In Defense of FATCA 
• Gene Magidenko (UMich) – A Defense of Citizenship Taxation 
• Gianluca Mazzoni (Brescia) The Interaction Between FATCA and Data Privacy 
• Miguel Nicolas (UParis) FATCA and International Law 

The range of topics and viewpoints represented is encouraging and I look forward to the discussion.