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Pepperdine University School of Law

Thursday, December 26, 2013

Christians: What the Baucus International Tax Reform Plan Reveals About Tax Competition

Tax Analysys Logo (2013)Allison Christians (McGill), What the Baucus Plan Reveals About Tax Competition, 72 Tax Notes Int'l 1113 (Dec. 23, 2013):

Conventional wisdom explains tax competition as an external constraint on lawmaking: All countries compete for investment in a global capital market, and therefore each is forced, as by an incontrovertible law of nature, to lure investment into their jurisdiction with attractive tax policies. Conventional wisdom then also surmises that the only way governments can curb tax competition is by working together cooperatively to eliminate beggar-thy-neighbor tax policies. The international tax reform plan recently introduced by Sen. Max Baucus, D-Mont., squarely confronts both parts of this conventional wisdom and reveals some very disturbing observations about tax competition: that it is as much a supply-side as a demand-side problem (luring strategies require a supply of otherwise tax-favored capital), that governments have always had the power to counter this problem, and that accordingly, political will is the reason why tax competition has become the overwhelming force that it is today.

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