Inter-nation tax equity: An enquiry into the distributive justice concerns of international tax allocations between countries
Inter-nation tax equity , International tax allocations
This thesis examines whether the economic benefits of international commerce are or can be equitably distributed between countries through international tax systems. It explores how international tax revenue is presently allocated between nations and considers how such allocations could be made more equitable. The idea that international tax revenues should be equitably shared between countries is implicit in the concept of inter-nation equity. Broadly, the concept proposes that countries should share their international tax base (or revenues) in a manner that is fair to all of the countries concerned. It forms the basis for a theoretical model of the relationships between the international tax system, inter-country distributive justice, and the socioeconomic disparities between countries. However, the distributive justice aspects of the concept as it is currently understood are problematic. This thesis investigates these concerns in both the theory of inter-nation equity and its application in international tax systems. The thesis finds that the current bases on which international tax is allocated do not support systematic redistribution between countries, partly because of a lack of clear distributive justice objectives in the underlying principle of inter-nation equity. To cure this shortcoming, the thesis offers two broad recommendations. First, the concept of inter-nation equity should be expanded to include the element of redistribution as an explicit and integral component. Second, to support such a redistributive element, quantifiable determinants, such as the relative wealth of countries and the respective incomes that they earn from mutual cross-border commerce should be used as the basis for allocating tax between countries. Such changes would encourage countries to share their international tax revenues in a manner that is fair as well as systematically redistributive, rendering the inter-country tax allocation process more equitable.