Bird: Are Global Taxes Feasible?

Richard Bird (University of Toronto) has a recent working paper on the question. The obvious answer is “no” and Professor Bird does not disagree. Nevertheless, he sees possibilities in existing international organizations that might provide the foundation for solving a coordination problems that might aid in dealing with a variety of cross-border flows that represent at least a large part of the problem.  Here is an excerpt I liked (p. 28, citations and footnotes omitted):

The existing international tax system is the product of pragmatic attempts beginning with the League of Nations almost a century ago to accommodate the varied ways in which commercial activities take place by modifying tax laws developed essentially for domestic purposes. Over time, a loose confederation of some key developed countries concerned with international tax issues emerged. The recent BEPS (Base Erosion Profit Shifting) discussions under the auspices of the OECD expanded this coalition to include some significant developing countries. Countries increasingly share financial and tax information through a plethora of Tax Information Exchange Agreements (TIEAs) and bilateral tax treaties, largely aiming at limiting the possibility that income can be hidden from interested tax authorities […] Those who want clean solutions to what they see as obvious problems – whether their ultimate concern is to ensure all international and domestic operations are taxed similarly or to redistribute the world’s wealth – are unlikely to view this messy and incomplete process or its (at best) half-baked result as satisfactory. Some degree of duplication, coordination costs, and at best only partial success almost inevitably results from decentralized decision-making structures, though perhaps in a world of conflicting interests and less than full information the outcome may be better – or at least more acceptable — than those of a more centralized structure.

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