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Tax Justice and the Political Economy of Global Capitalism, 1945 to the Present

Tax Justice and the Political Economy of Global Capitalism, 1945 to the Present

Jeremy Leaman
Attiya Waris
Copyright Date: 2013
Edition: 1
Published by: Berghahn Books
Pages: 360
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  • Book Info
    Tax Justice and the Political Economy of Global Capitalism, 1945 to the Present
    Book Description:

    Tax "justice" has become an increasingly central issue of political debate in many countries, particularly following the cardiac arrest of global financial services in 2008 and the subsequent worldwide slump in trade and production. The evident abuse of tax systems by corporations and rich individuals through tax avoidance schemes and offshore shadow banking is increasingly in the public eye. Above all, the political challenges of recovery and structural reform have raised core issues of burden-sharing and social equity on the agendas of both civil society groups and political elites. Democratic states need tax revenue to fund public goods and combat public "bads" with any degree of legitimacy. The contributions to this book discuss the haphazard evolution of contemporary taxation systems, their contradictory effects in a globalized economy, and the urgency of their reform as a precondition for social justice.

    eISBN: 978-0-85745-882-7
    Subjects: Business, Political Science

Table of Contents

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  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. List of Tables and Figures
    (pp. vii-x)
  4. Introduction: Why Tax Justice Matters in Global Economic Development
    (pp. 1-16)
    Jeremy Leaman and Attiya Waris

    The concept of tax justice has become a part of social and political currency in recent years. It reflects an increased awareness of the centrality of taxation to the affairs of the individual state – as a fiscal jurisdiction – and to the relationship between states within the global political economy. It has arguably moved up the agenda of the powerful block of developed states in the wake of the global crises which erupted in 2008 and which exposed the fiscal vulnerability of those states to the costs of structural and cyclical crisis management. Substantial budget deficits and growing accumulated sovereign debt...

  5. Part I: Taxation, Tax Culture and Taxation Reform in European Countries

    • Chapter 1 Dismantling Slasher Osborne: Why Britain Needs Tax Reform, not Cuts
      (pp. 19-37)
      George Irvin

      Writing inthe Guardian, George Monbiot has bemoaned the fact that the TUC and other organisers of the anti-cuts demonstration on 26 March 2011 failed to spell out a succinct alternative (Monbiot 2011). That’s not quite true. A myriad of books, pamphlets and journalistic articles have been written about how the financial crisis became a recession and setting out alternatives to Osborne’s vicious wielding of the budgetary axe.¹ Below, I elaborate on these alternatives once more. The main points can be summarised as follows:

      Rebutting ‘handbag economics’ is not difficult; crucially, the notion of the ‘structural budget deficit’ is highly...

    • Chapter 2 Social and Economic Aspects of Tax Policy in Germany
      (pp. 38-59)
      Dieter Eissel

      This chapter provides an overview of the development of tax policy in Germany, exploring the publicly stated logic behind official policy, but showing rather that the assertion of its positive function for growth and jobs was without any substance. The redistributive policy was not simply a flop economically but also contributed to a widening gap between rich and poor, and endangered the public sector’s capacity to ensure future public investments – in the physical and social infrastructure, including education, and in sustainable energy – because of the increasing poverty of the central state as well as of the Länder (regional states) and...

    • Chapter 3 Tax Reform, Income Inequality and the Welfare State: The Case of Portugal
      (pp. 60-78)
      Miguel Glatzer

      Portugal, Spain and Greece are among the world’s most recent welfare states. Democratisation in the 1970s, followed by accession to the European Community in the 1980s, is central to most accounts of the rise in social spending in these three countries. Democratisation provided an impulse for greater social spending as the political systems responded to unmet needs. It is true that the dictatorships, particularly in the 1960s and early 1970s, had paid some attention to social policy, but these initiatives tended to cover only the civil service and core sectors of the workforce. Large portions of the population survived without...

    • Chapter 4 The Fiscal Lessons of the Global Crisis for the European Union: The Destructive Consequences of Tax Competition
      (pp. 79-104)
      Jeremy Leaman

      The global crash of 2008/9 revealed many hidden fault lines in the edifice of finance capitalism and in the policy architecture of the states called upon to sort out its mess. Many of these fault lines were programmed into the operational mindset of the most recent generation of policy makers in the so-called ‘advanced economies’. One such fault line is evident in the Balkanisation of macro-economic policy making, in particular the neutralisation of policy coordination in the adoption of autonomous central banks and the associated imposition of a debt-avoidance imperative on treasury departments and individual spending ministries/agencies in most states....

  6. Part II: Taxation, Taxation Policy and Less Developed Economies

    • Chapter 5 British Government Attitudes to British Tax Havens: An Examination of Whitehall Responses to the Growth of Tax Havens in British Dependent Territories from 1967–75
      (pp. 107-132)
      Paul Sagar, John Christensen and Nick Shaxson

      Britain has close political and economic ties to thirty of the sixty tax havens ranked in the Financial Secrecy Index.¹ The British tax haven empire, including former colonies of the British state such as Hong Kong and Ireland, has captured a massive share of the market for offshore financial services, accounting for 37 per cent of global banking liabilities and 35 per cent of paper assets (Palan, Murphy and Chavagneux 2010).

      Several factors might explain the rise of Britain’s tax haven empire. Firstly, the growth of Britain’s imperial power during the nineteenth century was driven to a significant extent by...

    • Chapter 6 Tax Treaties between Developed and Developing Countries: The Role of the OECD and UN Models
      (pp. 133-150)
      Alberto Vega

      In order to prevent double taxation from taking place, tax treaties distribute the taxing rights of the country of residence of the taxpayer and the country where the income has its source. As developing countries are normally net capital importers from OECD member states, they usually prefer taxation at source. In contrast, net capital-exporting countries are more favourable to taxation in the country of residence of the taxpayer, since residents of developed countries are the ones who are more likely to obtain income from foreign sources.

      The OECD Model Tax Convention, the first version of which was published in 1963,...

    • Chapter 7 Taxation and State Legitimacy in Kenya
      (pp. 151-180)
      Attiya Waris

      Taxpaying and non-taxpaying citizens in developing countries including Kenya, both in their individual capacities and as a society, perceive taxation as firstly a necessary burden or obligation to the state and secondly, as a remission that has no commensurate benefits or guarantees.¹ In the former element, the concept of ‘necessary burden’ has resulted in revenue collection disparities in developing countries as the relatively large size of the economy is not reflected in the proportionately small amount of tax revenue collected. There are numerous reasons for this, including but not limited to the societal perception of tax as a burden leading...

    • Chapter 8 The Role of Inter-company Transfers of Intangible Assets in Tax Avoidance Practices in Nigeria
      (pp. 181-207)
      Olatunde Julius Otusanya

      Nations have traditionally used their tax systems as a means of exerting power, as well as a means of raising revenue. However, the ability to govern business through the taxation system faces challenges (Killian 2008). Nationallycentred tax systems are increasingly ineffective at governing mobile capital (Sikka and Hampton 2005; Killian 2008; Sikka 2008a). The mobility of capital has been aided by accounting technologies which emphasise private property rights and the appropriation of economic surpluses.

      ‘Intangible assets’, such as patents and trademarks, are increasingly seen as the key to competitive success and as the drivers of corporate profit (Dischinger & Riedel...

    • Chapter 9 Gender, Poverty and Taxation: An Overview of a Multi-country Study of Gender and Taxation
      (pp. 208-224)
      Caren Grown and Imraan Valodia

      Through gender budget initiatives (see Budlender 2000), gender activists have successfully raised the imperative for considering gender issues in public finance. There is little doubt that gender budgeting is now a well entrenched tool in a number of countries, and that at least some governments do systematically consider gender issues in expenditure programmes (ibid.). The other side of government budgeting, the revenue side, has received very little attention from analysts and activists concerned about the gender impacts of government policies. Drawing on a three-year, eight-country study this chapter outlines why gender activists should be concerned about the revenue side of...

  7. Part III: Recasting Taxation Policy:: Principles and Their International Implications

    • Chapter 10 Equity, Efficiency and Progressive Taxation
      (pp. 227-238)
      Paolo Ermano

      Generally, the literature on taxation focuses on the inverse relation between tax schedules and the effects on labour markets and savings. The main result is that the lower the progressivity of the tax schedule, the higher the positive effect on labour markets and on savings markets. This result derives from the assumption that taxes distort market incentives. According to Meltzer and Richard (1981), the size of the government, seen as a share of income redistributed, is determined by the deviation between mean and median income, but the degree of tax distortion that affects the labour market depends on the extent...

    • Chapter 11 Comprehensive Lifetime Taxation of International Citizens: A Solution to Tax Avoidance, Tax Competition, and Tax Unfairness
      (pp. 239-261)
      Douglas Bamford

      In this chapter I present a proposal for a different way to organise international taxation. This is a holistic response, whereby the focus is placed on the comprehensive income of individuals rather than numerous disjointed taxes. The system proposes to determine the tax rate for individuals based on theirproportional economic allegianceto different states and the tax rates they would face within each state. It would then share the tax collected for the individual out to states according to both their allegiance and the level of taxation in those states. This would require the creation of a World Tax...

    • Chapter 12 Tax Justice through Country-by-Country Reporting: An Analysis of the Idea’s Political Journey
      (pp. 262-282)
      Dries Lesage and Yusuf Kaçar

      This chapter analyses the political journey of the idea of ‘country-by-country reporting’ as a new financial reporting standard for multinational corporations (MNCs). Proponents believe that financial reporting on a country-by-country basis, among other things, will enhance MNCs’ compliance with tax laws, thus furthering tax justice. Given the huge interests at stake, the journey the idea has made through the institutions thus far is quite remarkable and successful. It started with an idea of few committed and specialised individuals in the United Kingdom (UK). Now, it is seriously discussed at a high level within international forums such as the European Union...

    • Chapter 13 International Taxes – Why, What and How?
      (pp. 283-307)
      Margit Schratzenstaller

      The international integration of national economies is progressing rapidly. At the same time, the provision and financing of international public goods is increasingly becoming an issue due to the emergence and growing acuteness of global long-term challenges like climate change or global imbalances and inequality.¹ These developments are the background for a growing discussion about the introduction of international taxes, which has been intensified by the current financial and economic crisis. Up to now, this debate has been held almost exclusively on a political level, while within academia the subject has not attracted much attention yet. This policy-oriented chapter aims...

  8. Notes on Contributors
    (pp. 308-312)
  9. Bibliography
    (pp. 313-342)
  10. Index
    (pp. 343-350)