Catching Capital: The Ethics of Tax Competition by Peter Dietsch

By Peter Dietsch

Wealthy humans stash away trillions of greenbacks in tax havens like Switzerland, the Cayman Islands, or Singapore. Multinational firms shift their earnings to low-tax jurisdictions like eire or Panama to prevent paying tax. contemporary tales within the media approximately Apple, Google, Starbucks, and Fiat are only the end of the iceberg. there's infrequently any multinational this present day that respects not only the letter but in addition the spirit of tax legislation. All this turns into attainable because of tax festival, with nations strategically designing monetary coverage to draw capital from in a foreign country. The loopholes in nationwide tax regimes that tax festival generates and exploits draw into query political monetary existence as we almost immediately understand it. They undermine the financial autonomy of political groups and give a contribution to emerging inequalities in source of revenue and wealth.

Building on a cautious research of the moral demanding situations raised by way of a global of tax pageant, this ebook places ahead a normative and institutional framework to control the perform. briefly, participants and companies may still pay tax within the jurisdictions of which they're individuals, the place this club can are available levels. additionally, the strategic tax surroundings of states could be restricted in very important methods. a global Tax company (ITO) might be created to implement the foundations of tax justice.

The writer defends this demand reform opposed to vital objections. First, Dietsch refutes the recommendation that regulating tax festival is inefficient. moment, he argues that rules of this kind, instead of representing a constraint on nationwide sovereignty, actually seems to be a demand of sovereignty in an international financial system. The e-book closes with a chain of reflections at the tasks that the beneficiaries of tax pageant have in the direction of the losers either ahead of any institutional reform in addition to in its aftermath.

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S. S. S. Equity and Debt Markets’, Journal of Finance 70, no. 1 (2015): 259. 17. See Hanlon, ‘Taking the Long Way Home’, 260. 18. See Tax Justice Network, Tax Us if You Can, 3. 19. bloomberg. com/artful-dodgers/>. 39 PA R T I for out-of-state wealth are multiplying, attracting vast sums of capital and seriously denting fiscal revenues in other states and at the federal level. 21 Now, these are forms of intracountry tax competition, which is not the focus of this book. However, it is plausible to think that states will be more tolerant towards this kind of tax avoidance in a situation where the alternative is to see capital flow into tax shelters abroad.

Unsurprisingly, distributive conflict followed. Common sense would suggest that both sides have to make compromises in such a conflict unless their bargaining positions turn out to be unequal. Usually, the dénouement of this distributive conflict is told as follows. Unions in industrialized countries refused to revise their wage expectations downwards, and as long as they succeeded to have their demands met through strike-action, they contributed to the inflationary pressures of the late 1970s.

As Wolfgang Streeck has poignantly expressed it, the indebted state of the twenty-first century in effect faces two constituencies. 39 On the one hand, it serves its traditional constituency of citizens, who exercise their political rights through regular elections; on the other hand, when the tax revenues from its citizens no longer suffice to cover its budget, it enters private financial obligations towards creditors in bond markets. This latter constituency in effect represents the interests of capital.

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