Catching Capital: The Ethics of Tax Competition

Hardcover | July 29, 2015

byPeter Dietsch

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Rich people stash away trillions of dollars in tax havens like Switzerland, the Cayman Islands, or Singapore. Multinational corporations shift their profits to low-tax jurisdictions like Ireland or Panama to avoid paying tax. Recent stories in the media about Apple, Google, Starbucks, and Fiatare just the tip of the iceberg. There is hardly any multinational today that respects not just the letter but also the spirit of tax laws. All this becomes possible due to tax competition, with countries strategically designing fiscal policy to attract capital from abroad. The loopholes in nationaltax regimes that tax competition generates and exploits draw into question political economic life as we presently know it. They undermine the fiscal autonomy of political communities and contribute to rising inequalities in income and wealth.Building on a careful analysis of the ethical challenges raised by a world of tax competition, this book puts forward a normative and institutional framework to regulate the practice. In short, individuals and corporations should pay tax in the jurisdictions of which they are members, where thismembership can come in degrees. Moreover, the strategic tax setting of states should be limited in important ways. An International Tax Organisation (ITO) should be created to enforce the principles of tax justice.The author defends this call for reform against two important objections. First, Dietsch refutes the suggestion that regulating tax competition is inefficient. Second, he argues that regulation of this sort, rather than representing a constraint on national sovereignty, in fact turns out to be arequirement of sovereignty in a global economy. The book closes with a series of reflections on the obligations that the beneficiaries of tax competition have towards the losers both prior to any institutional reform as well as in its aftermath.

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Rich people stash away trillions of dollars in tax havens like Switzerland, the Cayman Islands, or Singapore. Multinational corporations shift their profits to low-tax jurisdictions like Ireland or Panama to avoid paying tax. Recent stories in the media about Apple, Google, Starbucks, and Fiatare just the tip of the iceberg. There is h...

Peter Dietsch is Associate Professor at the Universite de Montreal. His research interests lie at the intersection of political philosophy and economics, with a particular focus on questions of income distribution as well as on the normative dimensions of economic policies.

other books by Peter Dietsch

Global Tax Governance: What is Wrong with It and How to Fix It
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Kobo ebook|Jan 1 2016

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Format:HardcoverDimensions:280 pages, 8.39 × 5.91 × 1.3 inPublished:July 29, 2015Publisher:Oxford University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0190251514

ISBN - 13:9780190251512

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Table of Contents

AcknowledgementsIntroduction1. The political philosophy of international taxation2. A primer on taxation3. What is at stake4. Tax competition and the financial crisis5. A short outline of the bookPART I1. Fiscal autonomy and tax competition1. Framing the question as one of autonomy2. Understanding tax competition *3. EL and its corrosive impact *4. State incentives under tax competition5. Conclusion2. Regulating tax competition1. Existing reform proposals and where they fall short1.1. Capital controls1.2. Unilateral measures to protect one's tax base1.3. Redefining the corporate tax base2. Two principles of global tax justice2.1. The first principle: membership *2.2. Transparency as a corollary of membership2.3. The second principle: A constraint on the design of fiscal policy *3. Implementation *3.1. Institutionalizing the membership principle *3.2. Institutionalizing the fiscal policy constraint *3.3. Enforcement *3.4. Efficiency as economic growth3.5. Taking stock4. Efficiency as an optimal trade-off5. Conclusion4. Rethinking sovereignty in international fiscal policy1. The many facets of sovereignty2. Sovereignty with strings attached3. Back to fiscal policy4. The twofold conditional nature of sovereignty5. What about non-democratic regimes?6. Conclusion5. Life with (or after) tax competition1. Should the winners of tax competition compensate the losers?1.1. What's the point of compensatory duties?1.2. Calculating compensatory duties2. Should low-income countries be allowed to compete on taxes?3. Unwinding the system of tax havens3.1. Additional duties towards low-income countries?3.2. Corporate lobbies - the elephant in the room4. ConclusionConclusionBibliographyIndex