Paul L. Caron
Dean




Monday, November 1, 2021

Dean: Can The Most Powerful Global Tax Organization Shed Its Racist Ways?

The Nation:  Can the Most Powerful Global Tax Organization Shed Its Racist Ways?, by Steven Dean (Brooklyn):

The NationThe Organization for Economic Cooperation and Development insists it’s “inclusive,” but it’s still strong-arming countries in the Global South.

We tax lawyers take pride in the complexity of our handiwork. The website of the US Internal Revenue Service quotes no less than Albert Einstein for the proposition that “the hardest thing in the world to understand is the income tax.” We take comfort in the notion that its complexity shields tax law from the damage done by ordinary human foibles. How could rules so byzantine possibly be distorted by racism?

As much as we might like to imagine otherwise, however, tax laws do not operate like the laws of physics. Not even the most brilliant tax expert will discover a universal truth like E = mc. Law professor Dorothy Brown has shown that US “taxpayers bring their racial identities to their tax returns,” so that “being black is more likely to hurt and being white is more likely to help.”

In global tax policy, anti-Black racism continues to be exploited to craft a system that will favor the haves (generating hundreds of billions in revenues for the United States) at the expense of the have-nots (banning a tax that would generate hundreds of millions for countries like Kenya and Nigeria).

This month, we’re seeing that dance play out in real time as the Organization for Economic Cooperation and Development (OECD) meets to revisit “key elements of the century-old international tax system.” For more than half a century, the world has tasked the OECD with overseeing the composite of national tax laws and international tax treaties governing the taxation of multinationals. Over those decades, the world has changed—but the OECD’s rules governing the taxation of multinationals have not.

That stability has preserved a profound inequality, invariably privileging the interests of insiders. Why would it prioritize the interests of some? Because the OECD is, and always has been, an exclusive club, an organization of elite global players. When designing tax policies, it has always acted for the benefit of its members—the world’s richest countries—at the expense of others. Who are those others? Aside from Antarctica, Africa remains the only continent that does not boast a single OECD member. Brown explains that within the United States, “it is the decision-making by white Americans that is largely responsible for Black outcomes today,” and, unfortunately, the same remains true globally. ...

In a better world, there might be a third Pillar designed by the United Nations (or an organization like the African Tax Administration Forum) to ensure that all countries have access to the revenue they need to meet the basic needs of their citizens. An ATAF proposal—or one of the “concrete proposals put forward by developing and emerging countries” that “have been ignored”—would certainly have done more to help the Global South and less to shield Facebook and Google from new taxes. You don’t need to be Einstein to see that allowing poor countries to impose digital services taxes—to recapture some of the wealth generated by their own citizens’ consumer spending—would help undo some of the harm caused by years of racist global tax policies.

https://taxprof.typepad.com/taxprof_blog/2021/11/dean-can-the-most-powerful-global-tax-organization-shed-its-racist-ways.html

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