INTLTAXFAIRNESS

THE USE OF INTERNATIONAL TAX ARRANGEMENTS TO PROMOTE GLOBAL WEALTH REDISTRIBUTION

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 Obiettivo del progetto (Objective)

'The proposed research seeks to determine how international tax arrangements could advance global wealth redistribution in a world of enhanced economic integration. Globalisation has placed traditional income tax systems under siege as domestic tax regimes fail to coordinate their actions to effectively tax cross border transactions. Furthermore, even though global markets operate in a world characterized by tremendous poverty and inequality, the international taxation literature rarely directly addresses issues of global distributive justice. If taxation is the price for civilization, then the burden of addressing issues of international taxation is the price for globalisation. The proposed research would stress that while international taxation may indeed be a cost of globalization, it is also a potentially powerful instrument to promote more just global market arrangements. To demonstrate this point, the proposal advances two related strands of research. The first strand would determine how international tax arrangements should be structured to take distributive considerations into account. Taxes involve big money, and therefore allocating the right-to-tax among nations has a distributional impact that should be addressed. This component of the proposal aims to establish the notion that international tax arrangements can promote global wealth redistribution more effectively than other tools such as trade regulation. The second research strand would demonstrate that a fair tax regime, which considers issues of redistribution, would also allow for stable multinational tax coordination. Including a fair redistributive component into such a tax-coordination arrangement would provide it with political legitimacy and incentivise developing countries to join it. The proposed research would develop this point in the context of the most salient problem within the contemporary tax arena, the taxation of multinationals.'

Introduzione (Teaser)

Many multinationals are viewed in a negative light for siphoning wealth from economically disadvantaged countries. A new taxation regime could help redress the balance.

Descrizione progetto (Article)

The issue of international taxation is a crucial consideration in redistributing global wealth, but not enough research has been undertaken with respect to this complex topic. The EU-funded INTLTAXFAIRNESS (The use of international tax arrangements to promote global wealth redistribution) project aimed to address this lack in research. It based its work on the premise that more efficient use of international taxation is not only possible, but could also redistribute resources among nations more equitably.

In total, five key research papers on this pivotal topic emerged from the project. The first two papers, which could support legal scholars, economists and academics in advancing this premise, focused on the concept as a whole and on normative issues. The publications show how the question of redistributions hasn't been adequately explored, proposing a framework to analyse the potential distributive impact of international tax arrangements. They also argue that in many cases wealth redistribution can be more effective than other balancing mechanisms such as international labour regulations, environmental laws and fair trade.

Beyond the two general papers, the project team produced three technical publications on taxation of multinational companies aimed at tax academics in public finance, accounting and law. Policymakers were also targeted, especially those interested in reforming their international tax system in line with global trends.

One technical paper focuses on taxation of related party interest payment, proposing an efficient and cost-effective method to allocate multinational enterprises' financial income. The second and third papers address how tax authorities should determine the location of income streams divided from intangible assets within a multinational group. The two papers propose alternatives to transfer prices and suggest that the income earned from certain types of intangibles be allocated via a cost-of-labour formula.

All five research papers could undoubtedly offer valuable insight not only to academia but also to the policymaking process. If the redistribution of wealth is taken more seriously, particularly with respect to international taxation, it could potentially alleviate poverty in times of financial crisis.