Thursday, November 11, 2021
Daniel N. Shaviro (NYU), Bittker’s Pendulum and the Taxation of Multinationals, 173 Tax Notes Fed. 621 (Nov. 1, 2021):
In this report, Shaviro examines the recent calls for increased entity-level corporate income taxation of multinationals, on both a source and a residence basis, and he details historical parallels.
Recent calls for increased entity-level corporate income taxation of multinationals, on both a source and a residence basis, have a distinctly back-to-the-future cast. At least as to the bottom line, they have far more in common with 1986-era thinking than with what has often prevailed in more recent decades.
This historical back and forth has ample parallels in other areas, and there are precedents from earlier eras. In corporate and international tax policy, as well as in the issues of taxing capital income and addressing high-end inequality more generally, the intellectual back and forth has reflected the rise of standard neoclassical Econ 101 precepts that in the preceding period had been underappreciated, followed by a growing awareness of what those precepts leave out. Meanwhile, the popular back and forth has reflected fluctuating public perceptions of unfettered free-market capitalism’s merits and performance.
As Mark Twain reportedly said, “History may not repeat itself, but it often rhymes.” This helps show that the current era, with its rising intellectual support for entity-level corporate income taxation (on both a source and residence basis) may not be the end of history, either. However, even Bittker might find it difficult to forecast today the next ensuing turn in the road.