Tax law is a technical area of law which does not seem to be culturally specific. It is thus seen as easily transferable between different societies and cultures. However, tax law is also based on definitions and notions which are not universal. So, is tax law universal or particular? Is it indeed easily transferable between different societies? And in what ways does tax law reflect ethnic or cultural rather than economic differences? This Article seeks to answer these questions by analyzing (...) one specific example — the history of income tax legislation in Mandatory Palestine. This history reveals the dual nature of income taxation. On the one hand, the Income Tax Ordinance which was enacted by the British in Palestine in 1941 was based on a one-size-fits-all colonial model, and the lawyers involved in its enactment, in Palestine and in the Colonial Office in London, made relatively little effort to adapt it to local conditions. On the other hand, other actors — the officials, politicians and businessmen involved in the initial debate about the imposition of income taxation in Palestine in the 1930s, and the administrators involved in the application of the specific rules of the Ordinance after it was enacted in the 1940s — were aware of the need to adapt the law to the specific conditions of Palestine. Thus, while on a formal level the Ordinance seems to represent a process in which the tax law of Palestine converged with that of other British colonies, once we expand our framework and examine not just law in the books, but also law in action, and actors such as politicians and administrators, we discover that particular local conditions were an important factor in the enactment and application of the Palestine Income Tax Ordinance. The study of the process of transplantation, the Article concludes, should therefore focus not only on the formal norms being transplanted, but also on the role of the different non-legal actors involved in the process. (shrink)

Equity and efficiency -- A society within a society -- Thomas Aquinas : the interplay of natural and positive law -- William of Ockham : repudiation of power and wealth -- Martin Luther's redistributive theology of the Lord's supper -- John Calvin and the challenge of inequality -- Triumph of the economy.

Relying on the systematic, logical, and analytical methods, national legislation and some internationally accepted guidelines, as well as on the research conducted by the Lithuanian scientists and law practitioners, this article consistently and comprehensively deals with the problems arising in the areas of interpretation and application of tax law. The article examines the relevant tax concepts, studies the tax law system, deals with the relevant issues arising in the field of application of legal regulations on taxation, and provides a particularly (...) detailed analysis of court jurisprudence within the context of the relationship between tax and law. On the basis of the analysis conducted, it was established that the basis for the Lithuanian tax law system consists of the Constitution of the Republic of Lithuania; the Law on Tax Administration; tax laws that lay down specific taxes and of by-laws adopted on their basis; national legal regulations that contain a consideration attribute and set mandatory payments to the State budget; the Law on Customs; ratified international agreements; the European Union legal regulations to the extent they are related to the duties, import excise duty, and value added tax; and the European Union directives in respect of direct and indirect taxes and the extent to which they are related to tax administration. When relationships in public law are directly regulated by the relevant public law regulations, it is not private law regulations, but the corresponding public law regulations that must be applied. In order to determine the need for tax authorities to rely on the regulations of the Civil Code, it is necessary to state the necessity to assess legal relationships from the point of view of private law or to identify a gap in legal regulation of public law due to which the norms of the Civil Code are subsidiary. Prior to establishing the tax base, the tax authority does not have to rebut transactions in civil procedure. The taxpayer’s obligation to fulfil tax liabilities that are properly prescribed by tax laws is not called into question by unlawful acts of other persons which constitute grounds for their civil (non-contractual) liability for the damages caused. The factual circumstances of tax relations established in the court cases heard in criminal and/or administrative procedures, do not need to be proved again – they are relied on in the course of tax inspections or when hearing tax disputes. The principle of equality of taxpayers requires tax administrators to give equal treatment to the facts with respect to all participants regarding the same tax relationship and obliges taxpayers to pay taxes honestly, because non-payment of taxes is a breach of public interest and therefore of this principle. In accordance with the principle of general applicability and equality, each taxpayer has an obligation to pay taxes as prescribed in tax legislation observing the calculation and payment procedures stipulated in the tax legal regulations, whereas the amount payable as established by the tax administrator shall be regarded as well-founded to the extent that it does not exceed the criterion of equality and reasonableness. The principle of clarity of taxation requires the tax administrator to adopt clear and comprehensive decisions with respect to the taxpayer and therefore to ensure their rights and legitimate interests. In the calculation of tax by applying the principle of primacy of content over form, it is necessary to establish that a transaction, an economic deal or indeed any group thereof has been concluded for the purpose of obtaining tax benefits. (shrink)

In order to achieve a desired effect of tax legal interpretation, its linguistic mechanisms are frequently insufficient. Elements of paralinguistic interpretation are more and more often indispensable. It applies inter alia when domestic tax law regulations must be verified in the light of the EU tax law. However, the study depict interpretative problems regarding the institution of remuneration of excess payments, which is regulated in Polish tax law. Considerations presented in this article confirm that legal interpretation of tax law is (...) a complicated process. It is important to establish correct system connection between the analyzed legal regulations and other provisions, often contained in other legal acts. Moreover, it seems necessary to refer to the purpose-oriented interpretation of the law. Only then a chance for a satisfactory final result of the provision’s legal interpretation can be guaranteed. What is more, such an effect will create an element being a part of a logically composed and arranged unity. (shrink)

Tax law changes at a startling rate - not only does societal change bring with it demands for change in the tax system, but changes in the political climate will force change, as will many other competing pressures. With this pace of change, it is easy to focus on the practical and forget the core underpinnings of the tax system and their philosophical justifications. Taking a pause to remind ourselves of those principles and how they can operate in the modern (...) tax system is crucial to ensuring that the tax system does not diverge too far from what it should be or could be. It is essential to understand the answers to some of the seemingly basic questions that surround tax before we can even begin to think about what a tax system should look like. This collection brings together major themes and difficult questions in the philosophical foundations of tax law. The chapters consider practical issues such as justification, enforcement, design, and mechanics, and provide a full and coherent analysis of the basis for tax law. Philosophical Foundations of Tax Law allows the reader to consider how tax systems should move forward in the modern world, with a sound philosophical basis, to provide the practical tax system that the state requires and citizens deserve. (shrink)

This article refers to the issues associated with the crucial significance of the interpretation of tax law provisions made by administrative courts in the course of the judicial inspection of tax decisions, within the context of protecting the subjective rights of taxpayers. The analysis in that regard has been prepared based on the provisions of art. 153 of the Act of 25 July 2002 on Proceedings before Administrative Courts, which expresses the important rule of binding the court and the administrative (...) authority, whose act was the subject of an appeal, with a legal assessment and instructions regarding the further proceedings described in the decision of the administrative court. As a result of this rule, a decision of an administrative court exerts the results exceeding the scope of judicial administrative proceedings, while its effect also covers the future tax proceedings. If the legal assessment made by the court refers to the regulations that affect the subjective rights of a taxpayer, it means that the administrative court imposes the effects of “its” interpretation of those provisions on a tax authority. In turn, the tax authority is obliged to respect those rights in accordance with the opinions of the court, which usually affects the final resolution of a tax case. It should be borne in mind that a taxpayer, by submitting an appeal against a tax decision to an administrative court, demands not only an inspection of the acts of tax administration, but also - which should be emphasized - demands the execution of its rights, including its subjective rights. Therefore, we should not forget the crucial role of the administrative courts in the protection of the substantive rights of taxpayers. The instrument that allows the administrative courts to guard the subjective rights of taxpayers, consists in the procedural regulations included in the provisions on proceedings before administrative courts, and in particular art. 153 of the Act on Proceedings before Administrative Courts in Poland. (shrink)

Interpretations of the tax law, issued by tax authorities, are a fairly new institution in Poland. They were introduced into the legal system by the Tax Ordinance Act of 29 October 1997. From that time these regulations were deeply changed three times. Now it seems that Polish legislator has finally succeeded in elaborating an appropriate model for binding interpretation of tax law that protects the interests of taxpayers. However, discussed regulations seem to need some other amendments. The objective of this (...) article is to present the evolution of the provisions pertaining to the issuing of the so-called official interpretations of tax law and to point at certain shortcomings of the present regulations. (shrink)

The level of communicativeness of official letters in the field of tax law leaves much to be desired. The article concerns the consequences of the application of “Language Relief” in the practice of applying tax law by the National Revenue Administration. The author calls for the principles of plain language to be introduced first in relation to acts of state law, so that officials can adapt their letters to the plain language of the law. A reversal of this order poses (...) significant risks to the protection of taxpayers’ rights since internal instructions and letter templates proposed on the NRA intranet will be used to a greater extent instead of legal acts. (shrink)

To build a relationship between Tax Administration and taxpayers based on trust, law science must provide the necessary information related to policies or institutions but also inform taxpayers about their rights and obligations. This information must be known but, above all, understood.The objective is to introduce a paradigm shift in the way legal studies are approached through Legal Design thinking techniques. Specifically, starting from the need for the jurist to study the law, collaborating with other disciplines to design mechanisms that (...) allow the communication of complex information that helps both the understanding of the law and decision-making process. (shrink)

The results of the linguistic interpretation should be verified through systemic and purposive methods of interpretation. That process is especially desirable in the cases where the result of the linguistic interpretation is not unequivocal. Whereas, as practice demonstrates, the quality of tax law is not the best, it is impossible to overestimate the role of the non-linguistic method of interpretation. The object of this paper was to present the role which the linguistic interpretation may play in interpreting the tax law. (...) However it was also important to: place the purposive interpretation among the methods of tax law interpretation and to present static and dynamic elements in tax law interpretation. Within the frames of this paper one can find out about historical interpretation of tax law, economic method of tax law interpretation and purposive interpretation directives. The above considerations allow for posit a thesis according to which purposive interpretation is an indispensable element of the process of interpreting a legal text. Its role in the scope of norms of tax law is, however, peculiar, since it serves only to verify the results of linguistic interpretation. However, it can be indicated that the growth in importance of purposive interpretation is direct proportional to the fall in the quality of tax law regulations. (shrink)

Managers of multinational companies often favour an aggressive tax avoidance strategy that pushes the legal limits onto the advantage of shareholders and the disadvantage of the spirit of democratically legitimized tax laws. The public and media debate whether such aggressive behaviour is immoral. Aggressive tax avoidance is a subset of the aggressive legal interpretations potentially observable in all fields which places little weight on the will of a democratically legitimized legislation. A thorough ethical analysis based on the deontological approach of (...) Kant demonstrates that aggressive tax avoidance as a special case of operating on the edge of legal boundaries is potentially immoral. Applying the Kantian “contradiction of conception or will” test shows that this maxim might not be conceived or willed as a general law of nature. If all natural or legal persons aggressively interpret laws on all subjects and in every imaginable situation, then central principles of the system of law we all rely upon would be severely compromised. Therefore, aggressive tax avoidance by managers of multinational companies may violate the managers’ moral duty to obey not only the letter but also the intention or spirit of the law. The validity of the argumentation depends critically on the formulation and interpretation of the respective maxims and on assumptions about the legal system. Preserving central elements of Kantian philosophy, the article demonstrates the complexity of a philosophical argumentation which tries to justify the moral intuitions that underpin the common negative evaluation of aggressive legal strategies in business. (shrink)

Insurance law in the eighteenth century is often seen as a perfect illustration of the way commercial law emerged from a relationship between the judges and the merchants, with Lord Mansfield at the centre, drawing on mercantile custom. This view tends to subordinate the role of both the merchants and Parliament. Yet, merchants were involved in shaping the law not just as witnesses and jurors in Mansfield’s court, but also through their promotion of, and opposition to, legislation, and through the (...) ways in which business was conducted and disputes were resolved. (shrink)

Anecdotal evidence often suggests that multinational enterprises operating in developing countries “exploit their multinationality” to avoid paying taxes to host governments. This article explores the concept of “responsible tax” as a corporate social responsibility issue for MNEs, based on the notion that MNEs face considerable variation in the extent, monitoring, and application of tax laws internationally. This variation creates a “moral free space” as to which tax payments to make. Using firm-level data from three important sectors in India, the authors (...) explore whether foreign MNE subsidiaries pay higher taxes than local firms, and whether, in the case of MNEs, there are differences between subsidiaries of MNEs with and without a reputation for CSR. The results show that MNEs pay considerably higher effective tax rates than do local firms, and MNE subsidiaries known for CSR pay more tax than do MNE subsidiaries less known for CSR. This set of findings suggests that MNEs operating in India see taxation in developing countries in relation to CSR. (shrink)

Professor Mitt Regan takes up Brad Wendel's suggestion that we have to distinguish the ethics of advocates from those which guide other forms of legal work, and proposes that the distinction be taken further. Legal advising can itself implicate different ethical positions. Regan concentrates on tax advisers, and argues that their work can, at times, legitimately require a partisan advocate's stance in the giving of tax advice or an impartial trustee's stance in ensuring that the spirit, as well as the (...) letter, of tax law is honoured. Especially in the US, there are strong systemic justifications for treating the tax adviser as an advocate: the wide latitude that tax law gives the citizen when calculating tax liability, the hazards of accurate interpretation of the tax code, and the need for predictability in client arrangements suggesting that it is preferable to concentrate strictly on the letter of the law. So too, the tax adviser as trustee is informed by the importance of tax collection for ordinary government services, and by 'tax morale' and the community's confidence in the tax system generally. The bifurcation of ethical stances in tax advising is, as a consequence, a function of the 'conflicted regulation' of citizen taxpayers. (shrink)

Four years after the Panama Papers scandal, tax avoidance remains an urgent moral-political problem. Moving beyond both the academic and policy mainstream, I advocate the “democratization of tax enforcement,” by which I mean systematic efforts to make tax avoiders accountable to the judgment of ordinary citizens. Both individual oligarchs and multinational corporations have access to sophisticated tax avoidance strategies that impose significant fiscal costs on democracies and exacerbate preexisting distributive and political inequalities. Yet much contemporary tax sheltering occurs within the (...) letter of the law, rendering criminal sanctions ineffective. In response, I argue for the creation of Citizen Tax Juries, deliberative minipublics empowered to scrutinize tax avoiders, demand accountability, and facilitate concrete reforms. This proposal thus responds to the wider aspiration, within contemporary democratic theory, to secure more popular control over essential economic processes. (shrink)

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 Fiat are 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 national tax 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 this membership can come in degrees. Moreover, the strategic tax setting of states should be limited in important ways. An International Tax Organisation 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 a requirement 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. (shrink)

The primary source of income in the Ottoman Empire, like in other pre-vious and contemporary states, was land. For this reason, the private ownership of land, especially those used for grain production, was avoided, and efforts were made to keep them as state-owned or public lands known as "mirî" or "memleket arazisi". This situation brings up the issue of cultivating the land and generating income from it. The Ottoman Empire further developed the timar system, which was also implemented by the (...) previous states, and allocated land to families based on its productivity by dividing it into certain sizes. These families were required to pay a tax known as "çift resmi", "raiyyet resmi", or "kulluk akçası." The system was based on the cultivation of the land by the peasants, thus ensuring both the production of crops without venturing food security and providing the state with the necessary tax revenue. Thus, it was necessary for the peasants not to abandon their land. One of the precautions taken to ensure this was "cebrî ikamet" (compulsory residency), and the other was "çift bozan resmi" (a tax imposed on those who leave their land uncultivated). Regulations regarding these measures have been included in the Kanunnames (legal codes) since the time of Fatih Sultan Mehmet, and they remained in effect until the 1858 Land Code. Since the nişancıs who prepared the Kanunnames had a good command in Islamic fiqh and the laws were at least theoretically approved by the sheikh al-islam until the mid-17th century, no one among the Ottoman scholars was known to oppose these regulations. Due to the serious disruption of the timar system and the increasing oppression of the peasants, criticisms of the "çift bozan" and "cebrî ikamet" measures began among the scholars in the Damascus region, led by Hayreddin Remlî, in the second half of the 17th century. This criticism intensified over time. In fact, two separate treatises were written on this issue. The scholars in Istanbul were also partly affected by this criticism. In this article, the "çift bozan" tax and its status in Islamic law will be primarily examined. All views in favor or against this issue will be put forth as much as possible, and an evaluation will be made while trying to come up with a different perspective. (shrink)

Boyer suggests that laws cannot account for ownership intuitions, but there may be situations when intuitions hew to laws almost perfectly. Laws granting governments taxation powers provide an interesting case study. We report data here suggesting that people's intuitions track law very closely, and are unaffected by manipulating a P() tag input. We propose two hypotheses to explain this finding.

In recent years there has been an increased awareness with regards to ethics in business. More specifically, the abundance of well-publicized examples of cheating, greed, and hypocrisy has created some alarm about the general state of personal ethics. Recent examples include the Oliver North, Ivan Boesky, and Jimmy Swaggart cases. The tax practitioner probably has little direct concern for matters of misconduct and ethical improprieties as mentioned above. Adherence to a code of conduct appears to circumvent the ethical conflict typically (...) found in the business environment. The tax practitioner's ultimate goal is tax minimization for clients. This goal has the blessings of the courts and the writers of tax law.The present day dynamic global economic system includes organizations which have extensive international activity. In an effort to enhance the performance of these organizations, there is typically decentralization of operations. When decentralization exists it is necessary to evaluate the decentralized units. Profit centers are commonly used for this purpose. With profit centers comes the need for transfer pricing between profit centers. The transfer price should be determined in some objective fashion. However, tax minimization often is the driving force in the transfer price decision. (shrink)

Any system of taxation depends on a substantial degree of compliance from the taxpayer. But do ethical considerations stop at obeying the letter of the tax law, or do they drive one to take a more critical and socially responsible attitude towards tax avoidance as well as evasion? Dr Alan Stainer is Head of Engineering Management at Middlesex University, Bounds Green Road, London N11 2NQ, and Founder Director of the International Society for Productivity & Quality Research; Lorice Stainer is Senior (...) Lecturer in Business Ethics at the University of Hertfordshire Business School and a Business Ethics Consultant; and Alexandra Segal is a Chartered Accountant, Taxation Manager with Keelings Chartered Accountants, London, and a Taxation Consultant. (shrink)

This Legal Solutions in Health Reform paper discusses the role that tax law can play in the implementation of health reform. The tax code has served as the primary vehicle for subsidizing health care in the U.S. for most of the last century and will likely play a role in any future reform efforts. However, the interplay between tax law and health policy presents a series of critical design and implementation challenges with which any health care reform package — be (...) they liberal or conservative — must grapple. This paper considers some of the most pressing of these issues. While it does not prescribe a particular outcome, it will attempt to identify potential tax solutions that might receive broad support and to observe the policy and administrative design questions that any discussion of these solutions should take into account. (shrink)

In contrast to many aspects of the social responsibility of business, CSR scholarship has been largely silent on the issue of the payment of corporate tax. This is curious because such tax payments are often considered a fundamental and easily measured example of a company’s citizenship behavior. However, because the payment of corporate tax can often be legally avoided, this activity represents a boundary condition for CSR. If the law and CSR suggest that a company should pay its fair share (...) of tax, yet many successful companies actively avoid this social obligation, should they be considered socially irresponsible. This paper explores the issue of tax avoidance and the implications it has for any credible definition and measure of CSR. It also highlights an aspect of corporate practice that is deliberately hidden from public view. (shrink)

We present an algorithm that can anticipate tax evasion by modeling the co-evolution of tax schemes with auditing policies. Malicious tax non-compliance, or evasion, accounts for billions of lost revenue each year. Unfortunately when tax administrators change the tax laws or auditing procedures to eliminate known fraudulent schemes another potentially more profitable scheme takes it place. Modeling both the tax schemes and auditing policies within a single framework can therefore provide major advantages. In particular we can explore the likely forms (...) of tax schemes in response to changes in audit policies. This can serve as an early warning system to help focus enforcement efforts. In addition, the audit policies can be fine tuned to help improve tax scheme detection. We demonstrate our approach using the iBOB tax scheme and show it can capture the co-evolution between tax evasion and audit policy. Our experiments shows the expected oscillatory behavior of a biological co-evolving system. (shrink)

The aim of this article is to determine how can new interpretations of old institutes change the status of the taxpayers and tax administrators and to suggest what can the Ministry of Finance do to solve the problem – it can try setting a uniform interpretation of tax institutes. It deals with two findings of the Constitutional Court of the Czech Republic concerning two institutes described in Tax Administration Act: time-limits for tax assessment and tax inspection; and one finding of (...) the Highest Administrative Court concerning local taxes. Court interpretation is only one of several possibilities of interpretation. Continental system of law differs from the Anglo-American system and we should search for information in the acts, and court practice should be used only alternatively. (shrink)

This article points to the highly centralized nature of the British tax system. A first section shows how all tax law derives from Parliament, the “onlie begetter” of legally enforceable instruments. It is suggested that this system is not democratically accountable at sub-national levels of government. Reforms of the Thatcher era have resulted in the privatization of many public services, leading to the stabilization of State expenditure as a proportion of GDP. However, at the same time, both tax revenue and (...) expenditure have become increasingly centralized. Public service tasks are determined and financed by central government, and local government is for the most part merely the agent through which government policy is realized. The creation of the Scottish and Welsh Assemblies does not alter this overall assessment. Given the high level of centralization, taxes are uniform throughout the country and there is no scope for meaningful regional fiscal competition. Since regional economic development in Britain is notoriously uneven, the author notes that fiscal uniformity does not lead to economic convergence. A final section is devoted to showing why this is not surprising and why fiscal harmonisation at a European level would be a source of growing, not reduced, disparities.Cet article met l’accent sur la nature hautement centralisée du système fiscal britannique. Une première section montre comment toutes les lois fiscales proviennent du Parlement, la “source unique” des instruments légaux exécutoires. Nous considérons que ce système n’est pas démocrat- iquement defendable aux niveaux subnationaux de gouvernement. Les réformes de l’ère Thatcher ont conduit à une privatisation de beaucoup de services publics, entrainant une stabilisation des dépenses de l’Etat en pourcentage du PIB. Cependant, dans le meme temps, à la fois les recettes fiscales et les dépenses sont devenues de plus en plus centralisées. Les taches du service public sont définies et financées par le gouvernement central et le gouvernement local est dans la majeure partie des cas l’agent à travers lequel la politique du gouvernement s’exerce. La creation des Assemblées Ecossaises et galloises ne modifie pas cette evaluation d’ensemble. Etant donné le niveau élevé de centralisation, les impôts sont uniformes à travers le pays et il n’y a pas de possibilité pour une concurrence fiscale régionale significative. Alors que le développement économique regional en Grande Bretagne est notoirement inégal, l’auteur remarque que l’uniformité fiscale ne conduit pas à uneconvergence économique. Une section finale est consacrée à montrer pourquoi cela n’est en rien surprenant et pourquoi l’harmonisation fiscale à un niveau européen serait une source de disparités croissantes, et non décroissantes. (shrink)

This paper develops two new measures of labor tax avoidance based on social contribution expenses reported in financial statements and tests them and their determinants within a sample of 224 Italian firms defined as legally registered Mafia firms due to having been confiscated at some point by judicial authorities, in relation to alleged connections with Italian organized crime. Overall, our results reveal that before confiscation LMFs engage more in LTAV than lawful firms do, whereas after confiscation there is no significant (...) difference between both types of firm. Furthermore, we find that several factors have a significant influence on the probability of engaging in such a practice. This study can enhance further research on the effectiveness of our measures and on the determinants of LTAV in other contexts and for other types of firms. Moreover, these measures can be added to the other direct and indirect methods commonly employed to measure and detect undeclared work representing a primary means of LTAV. Finally, our study allows inferring conclusions on the relation between corporate social responsibility and tax avoidance, suggesting that socially irresponsible firms, such as LMFs, are more likely to adopt this practice. (shrink)

Tax compliance is an important issue for governments and the public alike. To meet public needs and fund public mandates, firms around the world are expected to comply with tax laws. Factors that are related to organizational (firm) tax compliance have not been sufficiently examined in the literature. Owing to the increasing global influence of transition economies, factors associated with firm tax compliance in transition economies are particularly of interest. Based on a sample of over 5,000 firms from 22 former (...) Soviet Bloc transition economies, we find that higher levels of corruption and higher levels of particularized trust (reliance on friends and family) are associated with lower levels of tax compliance. Interestingly, we also find that the negative relationship between corruption and tax compliance is weakened in situations of higher generalized trust (trust in strangers). Overall, our study’s results suggest that institutional factors play an important role and are related to firm tax compliance behavior in transition economies. (shrink)

A story of rabbinic poverty relief serves as the fulcrum of this presentation of a rabbinic perspective on wealth and taxes. The rabbinic move, from biblical to Mishnaic law, places the obligation of poverty relief on the city and suggests that the institutions of the polis are the only way to achieve justice on this scale. However, the city must be aware of the individual Other in making policy. In essence the story suggests that when policies ignore the face of (...) an individual stranger, they do not fulfill the demands of justice. This is the rabbinic attempt at threading the needle by walking in the tension between the obsessive asymmetry of the obligation towards the other person and the need for a larger more equitable system of justice which must include others. (shrink)

One of the central issues in comparative law and political economy is whether the forces of globalization will result in the convergence of public policies across countries. Noting in particular that taxes collected still cover a considerable range across industrialized countries — from a low of 20% of GDP to a high of 50% — some have argued that globalization has not resulted in a loss of tax sovereignty. However, following a review of the evidence, in this Article we conclude (...) that globalization has had significant but subtle effects on tax levels and structures. Moreover, these pressures will make it increasingly difficult for countries to raise revenue to finance new public needs and to structure their tax systems in order to achieve a more socially acceptable distribution of income than what market forces dictate. Tax levels in most countries have remained essentially flat over the past twenty years, but there is a host of reasons for thinking they would have continued to rise were it not for the pressures of globalization. Statutory corporate tax rates have declined dramatically and, although corporate tax revenues have remained robust, this has been due to factors unrelated to deliberate tax policy choices. Personal marginal tax rates have also declined sharply and tax revenues have been increasingly raised by regressive consumption taxes. These trends stem from tax competition brought on by the forces of globalization, not from changing ideas or other political variables. In this Article we conclude that in order to prevent tax competition from completely eroding the ability of countries to fashion their own tax systems, there will have to be considerable cooperation among the major countries and some harmonization of aspects of their tax systems, particularly as they apply to footloose factors of production. (shrink)

This is the conundrum that gives rise to the issue of tax avoidance: Although governments always seem to lack sufficient funds to support the needs of society, tax codes are often written that offer “a way out” of paying taxes for some but not all constituents. The ways out are referred to as loopholes that allow taxpayers to avoid taxes. This paper first defines the basic terms of tax avoidance and tax evasion and then offers an ethical review of the (...) morality of aggressive tax avoidance. Aggressive tax avoidance is then addressed in relationship a corporate entity’s tone at the top. The conclusion is drawn that use of the letter of the law to avoid payment of taxes sorely needed by governments for the good faith provision of public goods and services is ethically unacceptable. Several suggestions for change are provided, including a new financial statement disclosure and the possibility of a published corporate ethics report. (shrink)

The scholarly literature suggests high or increased tax burdens tend to reduce economic growth, lowering incomes. Some argue, however, that low taxes and high economic growth can have adverse income distribution consequences or can lead to utility-reducing under-consumption of needed public goods. Evidence is presented questioning those assertions. People seek happiness by moving, and tend to migrate to low tax areas. Moreover, there is little evidence that governmental expansion leads to truly greater equality. Appropriately measured, income equality is actually far (...) greater than typically claimed. Moreover, income data suggest that the international equalization of incomes and global reduction of poverty largely reflect private sector activity, namely market forces working where the rule of law and strong protection of property rights prevails. (shrink)

In lieu of an abstract, here is a brief excerpt of the content:Reviewed by:Law’s Virtue: Fostering Autonomy and Solidarity in American Society by Cathleen KavenyEric E. SchnitgerLaw’s Virtue: Fostering Autonomy and Solidarity in American Society By Cathleen Kaveny WASHINGTON, DC: GEORGETOWN UNIVERSITY PRESS, 2012. 304 PP. $29.95In Law’s Virtue, Cathleen Kaveny calls those in Western liberal countries to rethink their fundamental framework of ethics and law through the guiding principles of autonomy and solidarity, understood through the Catholic context of Thomistic (...) virtue. The law operates not as the fence of individual isolation as it does in Enlightenment rights theory, whereby liberty is preserved through negative restraint, but as the teacher of a limited form of the virtues of prudence and justice (52). The law teaches this thin form of prudence through autonomy, which Kaveny takes from Joseph Raz as “the capacity to be the ‘part-author’ of one’s own life” (53). Solidarity, pulling from Pope John Paul II, correlates to a learned justice, in that it “attend[s] to the unseen members” of the community (54). It recognizes that the good of the community and the good of individual members are inexorably intertwined.The opening epigram of the preface, which sets the tone for the whole work, is a quotation from Isidore of Seville found in Aquinas: “Law shall be virtuous, just, possible to nature, according to the custom of the country, suitable to place and time, necessary, useful; clearly expressed, lest by its obscurity it lead to misunderstanding; framed for no private benefit, but for the common good” (xi). Kaveny argues that the phrases “possible to nature” and “custom of the country” need more attention in pluralist, democratic societies, because law is morally formed by its constituent community and there are deep disagreements within those communities. This gives a direction for how Catholics, and all citizens, should attempt to influence laws in these democracies. Because the law is a form of consensus over time, it should use severe sanctions such as criminal law only to reinforce the consensus that it represents. Tort and tax law are less severe tools that can encourage the moral direction of society, which, when used well, maintain the consensus of the law but still allow it to be a moral teacher.Kaveny’s practical thinking in this text does have some seeds of radical change. When she moves to the practicalities of life issues in the law—such as abortion, euthanasia, and genetics—she argues that the “entire fabric of the Anglo-American legal system” needs to add the concept of the “vulnerable” person to the “reasonable person” (79). In addition, her reframing of life issues contends that the Catholic view of issues like abortion is too different from [End Page 212] the “custom of the country” to make a change to the virtues and practices of other citizens. Instead, attention to the support necessary for families and social difficulties of economic poverty represents a way of using the law as a moral teacher while recognizing its limits (89, 156, 209). The book concludes with an incisive look at voting, in which Kaveny argues that the idea of issues-based voting is wrongheaded; instead, she urges voters to consider that they are voting for an individual who will take a broad moral stance and make a broad set of decisions (197 ff.).The quality of Kaveny’s clear thinking and moral consistency makes this book a pleasure to read—even for those who may disagree about the nature of the law or the virtues that Christians should bring to political, legislative, and judicial systems. This text, from its depth of legal and theological commitments, sets a high bar for further dialogue.Eric E. SchnitgerFuller Theological SeminaryCopyright © 2015 Society of Christian Ethics... (shrink)

This article joins a somewhat nascent, but growing, body of scholarship addressing the ethical obligation to pay tax. The analysis is grounded to the ethical duty to obey law generally and highlights two competing orientations to statutory interpretation. The norms of self-interested advocacy suggest that tax planners should assert that interpretation that will generate the most wealth for the client. The norms of professional advising, by contrast, direct the tax planner to interpret tax law with reference to plain meaning, interpretive (...) maxims, court precedents, and legislative purpose. When the two orientations differ, the ethical duty to obey law requires the tax planner to recommend, and for the taxpayer to follow, the latter view. Case studies drawn from a Louisiana sales tax avoidance scheme and from Google’s profit-shifting activities illustrate the ethical issues incumbent in tax interpretation. (shrink)

This paper proposes a novel use of tax policy to address one of the most pressing issues arising from economic globalization and international migration, that of “brain drain” – in particular, the migration of certain skilled and highly trained or educated professionals from less and least developed countries to wealthy “western” countries. This problem is perhaps most pressing in relation to doctors, nurses, and other medical professionals, but exists also for teachers, lawyers, economists, engineers, and other highly skilled or trained (...) professionals. While there have been other proposals in the past to use tax policy to address brain drain (most famously versions of the so-called “Bhagwati Tax”, a form of exit tax), in this paper I provide an account of and justification for using tax credits, modeled loosely on the foreign tax credits U.S. citizens receive in certain situations for taxes paid in other countries. My proposal avoids several of the pitfalls of other methods of using tax policy to ameliorate the harms of brain drain, as it does not subject people from the developing world to potentially onerous double taxation, and does not depend on sophisticated tax collection capabilities within developing countries, capabilities which are often lacking. Additionally, my proposal also leads to fewer morally problematic restrictions on the liberty of citizens of less and least developed countries than do non-taxed based alternative proposals, such as temporary bans on migration. While the proposal cannot hope to completely solve the problems that arise in relation to brain drain – no approach can do this – it does provide a straightforward way to ameliorate the problems that arise from it without placing significant financial or liberty burdens on already less advantaged people from the developing world. -/- (This paper may be downloaded for free from the link to my SSRN page below). (shrink)

Within the health care industry, the move from regulatory cost controls to market competition has generated rapid and dramatic restructuring of providers. To enhance their competitive positions in the evolving market, many health care organizations are pursuing the ownership and integration of all elements and stages of health care delivery and payment, with the goal of increasing access to capital and lowering costs through administrative efficiencies and economies of scale. As of July 1994, 24 percent of hospitals were members of (...) an integrated delivery system, and 47 percent were involved in IDS development.IDSs pose a singular challenge to the Internal Revenue Service. The IRS recognizes that its traditional policies for granting tax exempt status are not flexible enough for the competitive and rapidly changing health care market. In recent years, the IRS has taken a more active role in scrutinizing emerging health care institutions seeking taxexempt status. (shrink)

Consumption of sugar-sweetened beverages contributes to multiple health problems including obesity, diabetes, and tooth decay, especially among children. Excise taxation has been proven efficacious in changing purchasing behaviors related to tobacco use with resulting improvements in public health outcomes. Similar taxes applied to SSBs are starting to take hold internationally and domestically. SSB taxes have been proposed in over 30 U.S. jurisdictions since 2009, but only Berkeley has passed and implemented one to date. Given empirical evidence of their effectiveness, governments (...) should consider implementation of SSB excise taxes based on uniform definitions of SSBs and other factors. (shrink)

Imagine two friends. Anna inherits nothing and works for every penny she has, while Mary inherits millions. How should a world that respects individual autonomy and private property rights treat Anna’s earnings and Mary’s inheritance? Should it tax them the same, or tax one more heavily than the other? If the latter, which one? The conventional wisdom holds that although some “right” libertarian theories justify taxing income, none justify taxing inheritances. Such taxes are “expropriations” and “an especially cruel injury” that (...) “run[] roughshod over [a] deceased’s interest in the ends his property will serve.” This essay explores the standard libertarian objections to taxing gifts and bequests and argues that libertarians overstate their case when distinguishing the taxation of gratuitous transfers from other types of taxation. At minimum, the benefit theory of taxation embraced by many minimal statists and classical liberals mandates that the receipt of gifts and bequests should be taxed to the recipient. Moreover, the goals of curbing inherited political power and preventing wealthy families from insulating their members from market competition provide two additional explanations for why taxing inheritances to recipients is compatible with classical liberal values. (shrink)

Evasion of value added tax (VAT) is a pressing criminal justice problem; however, there still are no theoretical studies on the specific nature of this offense and the basis of its legal evaluation. This article is an attempt to explain the preconditions of the origin of this type of fraud and its connection with the Value Added Tax Law, to formulate the conceptual understanding of the offense, to reveal the important aspects of its legal evaluation and to discuss relevant examples (...) from the case-law. The preconditions of VAT fraud lie in the legal nature of tax administration and the particularity of VAT regulation creating opportunities to abuse the right of deducting the overpayment from the budget or reducing the tax payable. The system of tax crimes stipulated in the Criminal Code is not sufficient to properly assess the impact and danger of VAT fraud. The judicial practice considering VAT deception as property fraud is theoretically justified and welcome. (shrink)

Barbara Fried takes the view that uniform taxation—that is, a single rate applicable to all income levels—cannot be defended on any grounds of justice. She goes further by saying that, of all possible rate structures, it might be “the hardest one”? to ground in “a”? theory of fairness. Using the contractarian-constitutional perspective advanced by John Rawls and James Buchanan, this article argues that tax uniformity can be seen as a requirement of justice. After modelling how the political world realistically decides (...) to distribute tax shares (self-interested parties act under a majority constraint), I show how the uniformity principle could emerge from the constitutional contract. In other words, rational individuals would choose uniformity as a procedural constraint under a “veil of uncertainty”?; that is, with limited knowledge regarding their positions under the future application of the rule. Moreover, I elucidate how the uniformity requirement integrates generalized criteria of fairness and efficiency into fiscal politics as it precludes fiscal exploitation and constrains majorities, and their most influential subgroups, to opt for policies in the direction of the Pareto frontier, and as such promotes outcomes acceptable to all participants. (shrink)

Paying taxes, as determined by the legislature, is a moral obligation owed by members of a community to their community. Question is whether paying taxes has become an exclusively legal affair: a legal obligation towards the state, replacing a moral obligation towards society. This chapter tries to find an answer to that question by analysing social contract theorists and their critics. Social contract theorists and their critics searched for principles underlying a viable civil polity. Hobbes, Spinoza and Hume focused on (...) political and legal authority and obedience; grounding their theories on various ideas regarding human motivations and human sociability. These different starting points resulted in diverging conceptions of the reciprocal relationships between ruler and subjects and between subjects and fellow subjects. We will show the consequences thereof for the relationship between tax law and morality. Different conceptions of the reciprocal relationships involved may invite behaviour varying from minimalist compliance to a more liberal compliance with tax law. Taxpayers facing absolute sovereignty may adopt a legalistic attitude relying on the letter of the law or exploiting loopholes rather than stay within the spirit of applicable tax legislation. (shrink)

The origins of U.S. corporate taxation are often associated with the 1909 corporate excise tax. Scholars who have investigated the beginnings of this levy have mainly focused on the legislative history of the 1909 corporate tax to argue that it was either an expression of the Progressive Era impulse to regulate large-scale corporations or an attempt to use corporations as remittance devices to collect taxes aimed at wealthy shareholders. This Article broadens the conventional historical accounts of the emergence of American (...) corporate taxation by revisiting the 1909 U.S. corporate tax from a comparative perspective. The aim is to look both below and beyond the American nation-state to determine how and why U.S. state governments and other Western industrialized nations tried to tax corporations at the turn of the twentieth century. This Article investigates a small slice of subnational and transnational comparative examples: corporate tax laws and policies in a few representative nineteenth-century industrializing American states, and in turn-of-the-century England and Germany. Building on the well-known insights of comparative business history, this Article contends that historically-determined political interests, social ideas, and cultural beliefs help explain the American obsession with disciplining large-scale business corporations through the use of nominally punitive tax laws and policies. Comparative-historical analysis shows how differences in the organizational structures of big businesses across place and time have led to variations in political economy that were ultimately expressed in the legal ideas and cultural attitudes toward corporate capitalism. These variations, in turn, shaped the transnational distinctions in corporate tax law and policies. Greater attention to the comparative-historical development of law and political economy may help us understand the stubborn persistence of American corporate taxation, particularly in the face of recent global changes and the relentless economic critiques of the double taxation of corporate income. (shrink)