Catching Capital: The Ethics of Tax Competition

New York, US: Oxford University Press USA (2015)
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Abstract

Rich people stash away trillions of dollars in tax havens like Switzerland, the Cayman Islands, or Singapore. Multinational corporations shift their profits to low-tax jurisdictions like Ireland or Panama to avoid paying tax. Recent stories in the media about Apple, Google, Starbucks, and Fiat are just the tip of the iceberg. There is hardly any multinational today that respects not just the letter but also the spirit of tax laws. All this becomes possible due to tax competition, with countries strategically designing fiscal policy to attract capital from abroad. The loopholes in national tax regimes that tax competition generates and exploits draw into question political economic life as we presently know it. They undermine the fiscal autonomy of political communities and contribute to rising inequalities in income and wealth.Building on a careful analysis of the ethical challenges raised by a world of tax competition, this book puts forward a normative and institutional framework to regulate the practice. In short, individuals and corporations should pay tax in the jurisdictions of which they are members, where this membership can come in degrees. Moreover, the strategic tax setting of states should be limited in important ways. An International Tax Organisation should be created to enforce the principles of tax justice.The author defends this call for reform against two important objections. First, Dietsch refutes the suggestion that regulating tax competition is inefficient. Second, he argues that regulation of this sort, rather than representing a constraint on national sovereignty, in fact turns out to be a requirement of sovereignty in a global economy. The book closes with a series of reflections on the obligations that the beneficiaries of tax competition have towards the losers both prior to any institutional reform as well as in its aftermath.

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Author's Profile

Peter Dietsch
Université de Montréal

Citations of this work

Philosophy of economics.Daniel M. Hausman - 2008 - Stanford Encyclopedia of Philosophy.
Markets.Lisa Herzog - forthcoming - Stanford Encyclopedia of Philosophy 2013.

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References found in this work

Justice as fairness: Political not metaphysical.John Rawls - 1985 - Philosophy and Public Affairs 14 (3):223-251.
The Legitimacy of Global Governance Institutions.Allen Buchanan & Robert O. Keohane - 2006 - Ethics and International Affairs 20 (4):405-437.
Extra rempublicam nulla justitia?Joshua Cohen & Charles Sabel - 2006 - Philosophy and Public Affairs 34 (2):147–175.
Cosmopolitan Justice and Institutional Design.Simon Caney - 2006 - Social Theory and Practice 32 (4):725-756.
Tax Competition and Global Background Justice.Peter Dietsch & Thomas Rixen - 2014 - Journal of Political Philosophy 22 (2):150-177.

View all 8 references / Add more references