Adam Kern (NYU Law) has posted Progressive Taxation for the World (Tax Law Review, Forthcoming) on SSRN. Here is the abstract:
International tax law is about jurisdiction: It determines which countries may tax what. But the law’s allocation of jurisdiction between countries has enormous consequences for individuals, making some people richer and others poorer. These distributive implications require normative assessment, no less than the distributive implications of domestic tax law.
Tax scholars, however, are remarkably unsure about how international tax law should distribute economic resources. There are two main reasons why. First, national governments have great discretion over how they raise revenue and how they spend whatever revenue they raise. Because this grant of this discretion is so vast, it seems that each international tax regime could generate a wide range of distributions between individuals, making it difficult—if not impossible—to select an international tax regime so as to bring about a better distribution. Second, tax scholars tend to evaluate domestic policies with impartial moral principles, principles that give equal weight to each person’s interests. Those principles, many scholars think, do not apply internationally.
This Article clarifies how international tax law should distribute economic resources. Its main claims are surprising and have not been anticipated in the legal, economic, or philosophical literatures. First, this Article shows that national partiality makes discretion matter less. Specifically, the more that one country prioritizes its own people, the less that other governments’ inefficacy undercuts their claims to tax authority. Second, this Article also shows that national partiality shifts how taxing rights should be assigned among foreign countries. As one country prioritizes its own people, and the proper scope of other countries’ tax authority contracts accordingly, a greater share of that authority should be assigned to countries that are especially poor.
This conceptual framework has important implications for concrete issues in international tax law, including the foreign tax credit and formulary apportionment. It also helps to unify the theory and practice of two legal fields that have long been kept distinct. Much like domestic tax law, international tax law should provide individuals with a just share of the material resources they need to live good lives.
