U.S. tax changes spillover globally.
Yonah ’15 [Reuven Avi; July 21; Irwin I. Cohn Professor of Law and Director of the International Tax LLM Program at the University of Michigan Law School, PhD in History from Harvard University, AM in History from Harvard University, JD from Harvard Law School; University of Michigan Public Law Research Paper, “Consstructive Unilateralism: US Leadership and International Taxation,” no. 463]
4. Conclusion: Constructive Unilateralism or Multilateralism?
The above has been an attempt to suggest that unilateral actions by the US have historically played a positive role in constructing the international tax regime, and some suggestions for further US unilateral actions that could also be constructive.
But, it will be argued, why not try a multilateral approach, which seems to better fit 21st century multipolar realities than unilateral action by the no longer quite as hegemonic US?
The problem is that there is yet no good example of multilateralism working in tax matters. Both the MAATM and BEPS are very much works in progress. In my opinion MAATM has potential as a deterrence device and BEPS, while imperfect, has achieved some meaningful progress, especially in the treaty context. But change comes slowly, and for now I believe that constructive unilateralism is still the most promising way forward.
In the end, we should remember what our normative goals are. I believe that the individual income tax is necessary to achieve redistribution, and for that to happen each residence country should be able to effectively tax its individual residents on a global basis at its domestic rate structure. I also believe that the corporate tax is necessary to regulate corporate behavior, and for that corporations should be subject to tax on a global basis at a rate that represents the current consensus for corporate tax rates at source (in the 20-‐30% range). Those have been the normative goals of the international tax regime since its inception close to a hundred years ago, and the above has been an attempt to suggest some ways to move it forward into its second century.