Paul L. Caron

Tuesday, February 17, 2009

Mason: Made in American for European Tax: The Internal Consistency Test

Ruth Mason (UConn) has published Made in American for European Tax: The Internal Consistency Test, 49 B.C. L. Rev. 1277 (2008) Here is the abstract:

This Article offers an explanation for why the European Court of Justice (ECJ) has such a difficult time resolving tax discrimination cases. The "concurrent tax dilemma," the simultaneous exercise of tax jurisdiction by two countries in cross-border tax cases, tends to obscure tax discrimination because favorable tax laws in one Member State may compensate for discriminatory tax laws in the other state. Additionally, tax laws of two states may interact poorly, creating real, but non-discriminatory cross-border tax disadvantages. These non-discriminatory tax disadvantages distract the Court and increase the risk of judicial error. In light of these problems, Professor Mason concludes that the current approaches taken by the Court are inadequate to address the concurrent tax dilemma, and she proposes that instead, the ECJ should adopt the U.S. "internal consistency approach." Under this approach, developed by the U.S. Supreme Court to analyze state tax discrimination claims under the dormant Commerce Clause, the ECJ would ask: If all 27 Member States enacted the challenged rule, would intra-Community commerce bear a burden that purely domestic commerce would not also bear? Professor Mason shows how use of this test could reduce the risk of judicial error in tax cases, thereby potentially fostering market integration in the European Union, while at the same time giving due deference to Member State tax autonomy.

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