Paul L. Caron

Thursday, June 25, 2020

Avi-Yonah Delivers Keynote Address On Taxation After The Pandemic Today At Copenhagen Virtual Workshop On Corporate Tax Practice And Inequality

Copenhagen Business School, Three Day Virtual Workshop on Corporate Tax Practice and Inequality:

ReuvenScholars from the variety of fields that tackle either corporate sustainability or corporate tax practices do not ‘naturally’ meet for conversations, yet there are links between the various fields that could benefit from further dedicated exploration. Meanwhile, given the intensive media coverage of corporate tax practices and wider societal interest in the topic, much interesting research is underway to explore the linkages and other aspects of corporate tax practice that is relevant for the business in society agenda.

With this background in mind, this workshop will gather together speakers (and workshop participants) who are already involved in, planning or have a keen interest in research on the linkages between corporate tax and sustainability issues. The workshop will include presentation of innovative proposals as well as space for more general conversations about potential future research streams, key concepts that could inform work at this intersection, and theoretical themes or methodological approaches that are relevant to this work. It is our hope that the engagement between researchers from a variety of disciplines and with a variety of perspectives will generate new insights and add value to ongoing research that will enter the literature in the years to come.

The public key note speech by Professor Reuven Avi-Yonah from University of Michigan will be on Taxation after the Pandemic and followed by a Q&A:

If there is one thing that is relatively clear about the Covid-19 pandemic, it is that governments will need new sources of revenue to offset its costs and build a better social safety net. All over the world, governments are borrowing and spending at a pace not seen since World War II, and at the same time revenues from both income and consumption taxes are falling because of pandemic related slowdowns in economic activity. The result is unprecedented levels of debt that even with low interest rates mean inevitable needs for more revenue down the road. Even a country that borrows in its own currency like the US or Japan cannot debt well in excess of GDP forever without risking either inflation (if it creates money to pay off the debt) or a sharp increase in borrowing costs that crowds out other government expenditures at a time when they are most needed to bolster the social safety net, which the pandemic revealed to be quite fragile in many countries including the US.

What kind of revenue sources are we talking about? Here we need to distinguish among short, medium and long-term solutions. In the short term (1-5 years), governments need to rely on immediate solutions like excess profit taxes (EPTs) on companies that benefit from the pandemic and digital services taxes (DSTs) to capture some of the increase in the use of such services that may escape regular income and consumption taxes. In the medium term (5-10 years), governments should permanently increase taxes on the rich and on corporations to address the inequality that is likely to be exacerbated by the pandemic, and adopt carbon taxes to mitigate climate change. In the long term (10 years and more), new and innovative sources of revenue which may require more coordination than possible in the near future may emerge like taxes on artificial intelligence, cryptocurrency taxes, financial transaction taxes and others. In addition, governments of countries like the US that lack a VAT should adopt one.

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