Joseph Bankman (Stanford) presents Collecting the Rent: The Global Battle to Capture MNE Profits (with Mitchell Kane (NYU) & Alan O. Sykes (Stanford)) at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:
This paper explores the various tools available to jurisdictions in their quest to capture MNE rents. As we shall see the arsenal is an expansive one, including various forms of income and consumption taxation, government purchasing programs, price regulation, antitrust, and common trade instruments such as tariffs or quotas. ...
The paper is organized as follows. In part I we define terms and outline some legally relevant sources of MNE economic rent. Part II covers the basic descriptive analysis of how jurisdictions may seek to capture economic rent through the tax system. To aid analysis here we will work with three stylized, illustrative MNEs, which we will refer to simply as Computer, Pharma, and Coffee. These are meant to capture in a simple way the fact that MNE rents are likely to have different origins across different sectors and that different sectors are thus likely to present different challenges to jurisdictions seeking to capture such rents.
Part III covers the basic descriptive analysis of non-tax instruments. Specifically, we cover government purchasing programs, price controls, antitrust policy, tariffs, and quotas. Although there is inevitably some arbitrariness to categorization exercises, we have chosen to divide the world into tax and non-tax instruments because exposing this fault line reveals one of the more important discontinuities in existing doctrine. That is, doctrinal limitations that would seem to preclude the capturing of certain rents through the tax system do not constrain in the range of non-tax fields. Part IV attempts to draw general conclusions regarding the relationship among the various fields considered here.
This paper explores the various tools available to jurisdictions in their quest to capture MNE rents. As we shall see the arsenal is an expansive one, including various forms of income and consumption taxation, government purchasing programs, price regulation, antitrust, and common trade instruments such as tariffs or quotas. Although the jurisdictional goal of rent capture might well be constant across the use of this vast array of instruments, the legal regulation of such actions is anything but that. Instead, there would appear to be important fissures in the tapestry of legal regulation. Actions clearly ruled out in certain fields are easily justified in others. This surely reflects in part the autonomous and rather ad hoc development of the various bodies of substantive law that govern the range of potential actions here. Although a range of substantive law (e.g., tax, trade, and antitrust) will frequently apply to the same international transaction, these substantive fiefdoms are often fairly walled off from one another – in practice, in the academy, and in international legal instruments and organizations.