Ireland To Analyse Tax System's Impact on Developing Nations

This is a story to watch: Ireland is going to "review the impact its tax system may have on the economies of developing countries" with a "spillover analysis" research project that "will be conducted by consultants and overseen by a steering group consisting of officials from the Finance and Foreign Affairs Departments."

This is a fascinating development. I have long argued that tax competition is as much or more a supply side phenomenon as a demand side one, that is, it is nonsense to tell developing countries to lay off the tax incentives and get serious about taxing multinationals without looking at those MNC's home countries that are not effectively taxing these flagship companies and are therefore sending them out into the world looking for the best tax deals they can find. It seems patently obvious that anyone who is thinking about the connection between taxation and development really has to look at taxation as a globally integrated system even though it's more or less a Hobbesian war of all against all when it comes to setting national tax policy.

As a result, Ireland's request for research proposals is of great interest. From the story linked above:

The Government has published a request for Proposal/Tender outlining its aims and asking that prospective consultants provide details of suitable methodologies for their work. A public consultation document has also been released, and invites interested parties to make submissions. The initiative forms part of a broader effort to clarify Ireland's approach to international corporate tax issues. ... Ireland is further pledged to support such countries in raising domestic tax revenues in an efficient way, to promote good governance and equitable development, and enable them to eventually exist independently from official development assistance. The Department has also described the spillover analysis as a response to calls from the Group of 20 nations and civil society groups for all countries to be aware of these issues when formulating their own tax policy.

I look forward to watching this unfold.

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.

Must read: @Salon on Lobbyists Posing as Think Tanks

This is a must read. My first reaction was: this is not new, this is old hat. But the intentional misleading might be categorized as new. I have been doing some work on the problem of uneven political influence and how that fits in with the narrative of tax compliance (i.e., when the lobbyists write the rules, is it any wonder that GE, Apple, Google, Starbucks, etc, can say with pride that they dutifully comply with all applicable laws), and I have suggested that what is needed is more policy input from those who do not themselves stand to benefit directly from promoting a particular policy direction, namely, academics who research subjects for the purpose of increasing human knowledge. This means that in my view academics--which includes anyone who calls herself a researcher in any capacity--should always provide detailed disclosure of funding whenever publishing anything, so that the public can distinguish between advertising/advocacy and information.*

This is getting increasingly tough in our uber-consumer oriented society but we must stay vigilant about this, hence the dire need for organizations around the world doing things like the Center for Media and Democracy did here. In this story Salon hits the target directly on why disclosing pecuniary interests is critical to ensuring that public discourse does not fall to the fate of political representation in a nominally democratic but factually plutocratic society, namely, pay to play.

The concluding sentence says it all:

Certainly corporations have a right to have their voice heard, but that voice should be their own, not that of a phony expert on retainer.

* Note that this doesn't in any way mean that getting funding for engaging in research is inherently bad. It means that it is relevant to the conversation because some people find it politically expedient to provide funding in order to obtain specific findings and disseminate those findings as credible on the facts, and as an academic you ought not to want to be associated with that sort of propaganda, so you want to disclose your sources of support. In my view the research question should attract the funding and not the other way around. 

Global Tax Expert Database?

I've been slowly working through a couple of manuscript reviews and in one of them I started thinking about the problem of fly-in expert consultation, i.e., the traditional model of tax experts from rich countries flying in to developing countries to assess the situation and provide advice for tax reforms. This was connected to a conversation I had on twitter last week about how to get needed research on technical tax policy alternatives accomplished, when donors and tax policy institutions like the OECD tend to focus on tax assistance that furthers rather than challenges the status quo. The dangers inherent in these paradigms include policy ossification helped along by ideological entrenchment, as well as the privileging of historical ideas about who ought to be considered an expert. Also relatedly, in a paper I am working on about tax governance and the problem of special interest group influence, I am thinking about how to create more policy space for alternative tax policy views from academics and non-governmental, non-industry groups--i.e., those without direct (pecuniary or otherwise) stakes in tax policy outcomes.

This brought me to thinking again that lending expertise upon demand (rather than pushing expertise onto others) is an appealing idea and I would like to see some sort of a matching program, through which interested academics, NGOs, and other non-industry, non-government experts could make themselves available to revenue officials, especially in poorer countries, to collaborate on reforms desired by the officials, for instance by reading reforms proposed by industry or legislators or commenting on drafts of proposed tax guidance and the like. It would be an interesting project in and of itself, mapping out and connecting areas of interest and expertise that are currently excluded from the established network of government-run tax policy institutions and otherwise fragmented by geography, resources, and institutions.

Coincidentally, after I recently posted a comment on twitter about how the US could take unilateral measures to curb global tax avoidance if it chose to do so, fellow twitterer @hselftax wrote, "the #AdoptanMP campaign aims to give tech tax info to UK MPs. Perhaps you need #AdoptASenator in US?" Fascinating idea! Here is a website that talks about it.

How might such a program be built transnationally and tailored to tax collaboration on request? It would need to be voluntary on both sides--i.e., folks who self identify areas they would be willing to consult on, together with disclosure of credentials and affiliations, and revenue officials who identify areas in which they are seeking outside expertise. Does such a platform already exist, i..e, on LinkedIn or elsewhere? Is there an app for this? I know that the OECD has created tax inspectors without borders, but what I have in mind is a slightly different model than official-to-official consultation.

Growth for the sake of growth, plus ignorance and expertise in complex situations: two depictions

Edward Abbey said “growth for growth’s sake is the ideology of the cancer cell":

From a series called Illuminating Quotes, Visualised by Maggie Appleton. I like this drawing because it shows that there is plenty of room in the concept of capitalism that isn't infected by this destructive ideology. That's where we ought to concentrate our energies.

Appleton also nicely visualized Edward R. Murrow's statement that "Anyone who isn't confused doesn't really understand the situation," which seems particularly apt when it comes to tax law, especially international:

Tax transparency, democracy and "expertise"

Transparency is being fully contested in international tax circles:

The hosts were expecting a heated but constructive debate, and for most of the nine-hour conference delegates heard in turn the impassioned arguments of campaigners for country by country reporting and the deliberations of tax professionals whose main argument centred on the complexity of international tax.

The complexity issue is that if regular, uninformed people are given all the data, they will misinterpret it and hang effigies of the innocent.  This is an unconvincing argument that the OECD tried to imply with its consideration of the matter in 2011: “the issue of whether greater transparency could aid public debate on appropriate tax policy” would be “very difficult to assess” because the political discourse would involve “differing arguments, [that] can be used more or less responsibly.”  This is an argument that tax compliance is so subjective, no one could ever make sense of it definitively, so it's best not to argue it in public.  Only experts should do so, and then only in quiet rooms.

I was happy to see Sol Picciotto mentioned in the article, he's a terrific thinker and scholar on international tax:

During a discussion on tax dispute resolution Sol Picciotto, Emeritus Professor of Law at Lancaster University, interrupted James Bullock’s defence of modest meals shared at meetings with HMRC to say that the level of transparency being proposed was ‘quite clear – that taxpayers should declare what tax they pay in each country’.

Picciotto added: ‘As regards disputes, the terms of a settlement should be public. We’re not talking about sandwiches, we’re talking about the transparency of what tax people pay where. If a dispute goes to the tribunal, it’s public. If there’s a settlement, it should be public.’

Later, Judith Freedman, University of Oxford tax prof, said that publishing details of settlements ‘would not be that helpful’ to people: ‘What are they going to make of them? I want to have a properly instituted organisation which has independent experts who can scrutinise those settlements. That’s far better than leaving it to whoever happens to be able to pick up on this, the press …’

‘That’s democracy,’ a delegate shouted from the audience. Freedman continued: ‘I believe it’s the job of properly constituted organisations, rather than the press, to examine this because that would give us integrity and confidence in the system. These are very, very difficult things to understand.’

That statement is distressing on grounds of the expertise question alone.  Who decides what constitutes "a properly constituted organisation"?  Professor Freedman?  The Oxford Center for Business Taxation?

The article closes with a mention of a twitter feed associated with the conference, in which it was tweeted ‘It has to be admitted that few tax experts have oratory skills or passion comparable to [those of] tax campaigners and politicians.’


Perhaps, but it's a matter of backing and platforms, isn't it.

On Expertise and Influence: Interview with Ann Pettifor

What constitutes expertise as a social, political and cultural matter?  It involves charts, data, lines on a CV, connections, financial support, and a means of repeatedly broadcasting the same message.  In 2003, Ann Pettifor predicted the global debt meltdown but no one was listening; in this interview with the Renegade Economist [posted at NC], she discusses the crowding out of ideas that is perpetuated because of the structure of interest group-funded economics research.  This sounds so much like the Vijay Prashad interview in regards to the silencing of alternative views from UNCTAD which, like Pettifor, is credited with accurate predictions about the economic crisis.  A similar tale can be told about tax treaty policy making and the turf struggle between the OECD and the UN.  In international tax in general we see the cult of expertise in the claiming of "internationally agreed standards" on tax policy, with I think similar effects--the alternative view is too often silenced, sometimes intentionally but often just by lacking the necessary backing and platforms.

Starting at around the 7 minute mark, Pettifor has a lot to say about institutional expertise and about why we will continue to get more of the same policy prescriptions from influential economists: they are mostly "hired guns" who don't have tenure, while those with tenure, who can "afford to say that which is not mainstream," are few and far between.  She says most economists therefore "are employed in think tanks and research departments that are underwritten by the finance sector.  RE agrees: "if you watch Charles Ferguson's film Inside Job and you see the cowardice of the neoclassical economists at the end who jut blankly refuse to answer the questions and then when they do are full of spite, you get a kind of insight into the murky world you're dealing in."  

Pettifor then talks about conferences where neoclassical and heterodox economists are engaging in dialogue, and she says this is unusual because the neoclassicals "aren't used to dialogue with anyone who doesn't share their world view, and that is so damaging."

Jumping to 10:20, she lays out the intellectual/institutional conflict:

"I am right now reading a speech by a man called Ben Broadbent, who is on the board of the bank of England and who was at Goldman Sachs and who's written a paper saying that the cause of the crisis had absolutely nothing to do with easy money, i.e., unregulated money; it had everything to do with the fact that interest rates were incredibly low.   

Now when I read that paper, it is so deceptive really, and yet it's packed with charts and data, and some sources, even, of information, he does neglect to give us the source of some of his data, that paper, I am convinced, has been written in Goldman Sachs's research department and he's delivered the speech on behalf of Goldman Sachs and he's on the bank of the Board of England.   

Now, that's not a conspiracy.  It's huge political and economic power.  And those of us who have an alternative view don't have that sort of backing, and don't have those sorts of platforms, and that's very damaging for public discourse."

Much more on the substantive economic issues and debate as the interview continues.