TAX, SOCIETY & CULTURE

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Introduction to Tax Policy Theory

Published Jun 14, 2018 - Follow author Allison Christians: - Permalink

Every year I make this primer, an Introduction to Tax Policy Theory, available to my tax policy students (and otherwise send it whenever I'm asked for an overview look at tax policy basics), so I decided to post it on SSRN. It is not a published piece but may be some day. Here is the description:

Taxation involves the compulsory transfer of resources among members of society. Tax policy is concerned with how societies carry out taxation. That is a technical and legal question, but it is inescapably a political, social, and cultural one as well. To study tax policy is to engage simultaneously with the existential philosophical foundations of taxation: why and how societies tax. This introduction to tax policy theory presents an overview of tax policy discourse. The goal is to outline a working framework for reflection and analysis to examine the ways in which current assumptions and approaches require further development.  
Part I asks why we tax, and posits state-building, internal management, and negotiated expansion as three broad goals. Part II asks how we should tax, and examines the conventional frameworks of equity, efficiency, and administrative capacity as the three guiding principles for most tax policy analysis. Part III concludes.
And here is the brief TOC:

I.          Why Do We Tax?        
A.         State Building
B.         Internal Management
C.         Negotiated Expansion
II.         Normative Foundations          
A.         Equity
B.         Economic Efficiency
C.         Administrative Capacity
III.        Conclusion

Input as to what is missing is welcome; this is a work in progress. 

Tagged as: scholarship tax policy theory

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Taxing Income Where Value is Created: draft and powerpoint

Published Apr 11, 2018 - Follow author Allison Christians: - Permalink

I have posted a draft of a work in progress, Taxing Income Where Value is Created, which is co-authored by Laurens van Apeldoorn (Leiden University). Here is the abstract:

Subscribing to the core idea that income should be taxed where value is created, the international community has devised a set of tax base protecting rules to counter a world in which highly profitable multinational companies like Apple, Google, and Amazon pay very little in taxation. But these rules rely on assumptions about value that tend to allocate most revenues from international trade and commerce to rich countries while, whether intentionally or not, depriving poorer countries of their proper share. This article argues that a rigorous examination of what we mean by value would prompt changes in this allocation. To demonstrate with a concrete example, the article examines wages paid to workers in low income countries and reveals a clear and well-documented gap between market price and fair market value resulting from labor exploitation. It then demonstrates how to apply this knowledge to existing international tax rule sets to reallocate profits to align more closely to the value-based ideal. If accepted in principle, the proposed approach could be expanded beyond wages to consider other areas in which prices do not align with value creation. Ultimately this could provide a more detailed template to reallocate multinational revenues in a way that does not inappropriately benefit richer countries at the expense of poorer ones.
My powerpoint presentation of the paper is available in PPT here and in PDF here. I have used various versions of this powerpoint in presenting this paper a couple of times now, with (hopefully) some improvements in each presentation.

As depicted in one of my slides, I have encountered a perplexing mix of reactions to the ideas presented in this paper. Feedback ranges from "will make administration and compliance impossible for tax authorities and taxpayers alike" to "won't change anything, profit shifters gonna profit shift" to "great idea; doesn't go far enough." I wonder if a competent authority faced with a price adjusted per our proposal would see it as a position reasonable and consistent with the ALTP as we do, and whether it actually matters to the competent authority whether it is reasonable or consistent or not (I will admit that I am skeptical that competent authorities work out disputes among themselves on the merits: see this paper for why).


This is still a work in progress and comments are welcome.




Tagged as: corporate tax economics scholarship tax policy transfer pricing

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For female law students: 5 warning signs your important interview with that law firm won't yield you a job offer

Published Apr 06, 2018 - Follow author Allison Christians: - Permalink



[Update: I understand that some find this post to be (1) making a causal claim that is (2) sexist or misses sexism as a main causal factor of an unsuccessful job interview. I can see that I used the word "reasons" in the title, and that isn't right. As the blog post makes clear, I offered these as warning signs, not reasons: as I say below, "I have no way to know any more than they did who got the job or why they didn't get the job." The idea of this post is to explore some of the flags that might indicate an interview is not going as well as it seems on the surface. The reasons for which the interview might not be going well are many, and among them are pernicious behaviours and expectations. I revised the title to better reflect the content of the blog post but have not revised the text of the post below.]

I hear from law students all the time that an interview they thought went very very well didn't land them the job. A lot of the time (not always) these are female students. A lot of the time (not always) they were perfectly qualified and very capable. A lot of the time (not always) I think they probably would have done very well in a law firm job. I have no way to know any more than they did who got the job or why they didn't get the job.

However, I can identify some warning signs from my own experiences (not all horrible) and through countless conversations with my students over the years. In the hopes that this will help someone in some future interview, I offer five signs things didn't go as well as you thought they did:

1) You were wearing something uncomfortable. Believe me, it showed. If something is itchy or your feet hurt or whatever, if you thought for even one nanosecond about anything you were wearing, the interview was over that moment. Doubly over if you happened to inspect any part of yourself at any time. You were distracted, and your distress was noticeable. You did not go to this interview to impress someone with your impeccable taste in fashion. Be professional yes but be comfortable and laser focused at all times on why you are there.

2) The interviewer at any time looked at any piece of paper or a phone or iPad or anything but you. Clearly whatever was on the paper or the screen was more more important than you. You were supposed to be the star of this show, and you didn't command the full attention of your audience. Why is that? Are you waiting for the interviewer to ask you a good question, hopefully one that you meticulously prepared to answer? Why are you waiting for that? Your job in the interview is to actively engage the interviewer. Not the other way around.

3) There was more than one interviewer, and at some point they looked at or talked to one another instead of you. These interviewers are tired and they sat through a lot of interviewees today, making constant, mostly negative, judgments and decisions about a lot of people they don't know. They are looking for a way to take a mental pause during your interview. When you got lulled into that energy, you gave them the excuse; this is not a serious candidate, so we are on break now. If you don't wake them up, get them sitting straight in their chairs and laser focused on you, you will not get the job.

4) The interview mainly focused on your hobbies/other interests/places you've traveled; the firm's pro bono work; or its strong commitment to work-life balance. This is a job interview. You are being inspected for signs that you might not be 100% committed to living out your full life within the four walls of your office, serving the firm's paying clients with selfless dedication. You don't have any hobbies that don't involve reading the business section of the newspaper. (Note: take the hobbies or outside interests etc section off your resume and if anyone asks you what your hobbies are, they are: reading the business section of the newspaper, e.g., to see what new deals are unfolding. And then steer the conversation back to the job).

5) A day or a week after the interview, the thing you recollect the most is that the interview seemed pleasant and easy, and everyone was nice. You got a few minutes to make an impression that you are serious, capable, and a boss, and instead, you spent your time trying to be pleasant and unobtrusive. Stop trying to make people like you: you need to think about what you are doing that makes people not take you seriously. Is it your passive or deferential behaviour? Why do you think any law firm would want to hire a lawyer with those characteristics? They don't want to. So stop it.

You can commit a lot of perception errors in an interview. These are only five of the ones I note on an annual basis. If you notice them happening, realizing you are in a hole could be the first step to changing the conversation.









Tagged as: general life advice for law students

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Jensen on the costly politics of tax competition

Published Mar 10, 2018 - Follow author Allison Christians: - Permalink

Nate Jensen recently published an op-ed of note, asking "Why Are Your State Tax Dollars Subsidizing Corporations?" Nate has studied tax and corporate decision making for some time, and recently published "Incentives to Pander: How Politicians Use Corporate Welfare for Political Gain", which is on my reading list. This is, of course, a favourite topic of mine. A few excerpts from the op-ed:

Politicians are using public policies, from renaming a city to offering billions of dollars in grants, infrastructure improvements and tax abatements, to take credit for companies’ location decisions. ...
In all likelihood, incentives are overpaying firms, leading to lost resources that could be used for other purposes. If the incentives don’t pay for themselves, they must be paid for by either higher taxes or decreases on government spending. Local school districts are vocal opponents of incentives; they see their tax base being given away in the name of economic development. 
But in fact it is most likely the quality of the work force that will be the deciding factor for Amazon, not the billions in incentives. Proponents of incentives often claim that these subsidies pay for themselves, and voters often support these efforts, believing the promises of good jobs. But this is possible only if governments perfectly target the companies that require incentives and pay just enough, and not a penny more, to sway a company’s decision.
...Political pandering is behind this explosion. But there is also some of what Brink Lindsey of the Niskanen Center and the political scientist Steven Teles call the “captured economy.” In between these politicians and corporations are economic incentive consultants, tax professionals and lobbyists all providing ways for businesses to maximize their take, and getting a percentage of these incentives in return.
There is a role for government in economic development. State and local governments can help businesses without access to finance survive and expand, provide worker training that is valuable to residents and companies, and invest in traditional education from pre-K to college. There are certainly worthy investments that can be made. But $7 million for Carrier, $3 billion for Foxconn and billions for Amazon is just using the public coffers for political theater.  
Highly recommended reading in full for anyone interested in tax competition.

Tagged as: jurisdiction lobbying political malfunction politics scholarship tax competition

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Today at McGill: Law and the Blockchain: A Crash Course

Published Feb 21, 2018 - Follow author Allison Christians: - Permalink

A full house expected for today's event, but it's not too late to join us if you're in Montreal!


Tagged as: conference McGill tax technology

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Crisan and McKenzie on R&D Subsidies in Canada

Published Jan 30, 2018 - Follow author Allison Christians: - Permalink

The latest edition of the Canadian Tax Journal [gated] has a nice article by Daria Crisan and Kenneth J McKenzie that documents Canada's relatively generous tax subsidies for R&D spending, yet relatively underwhelming investment by large corporations, over the period 1981-2016. The article briefly summarizes the chronology of federal R&D programs and gives an overview of provincial policies. It finds that while Canada's spending on R&D is high relative to peer countries, the amount of R&D being undertaken relative to GDP consistently underperforms these peers and continues to decline. The bulk of the article is a presentation of data showing these trends. The conclusion is intriguing, positing three possible explanations for the puzzle of high spending but low investment:

The first is the rather obvious point that it may well be that Canada’s r&d performance would have been even worse in the absence of the subsidies. Of course we don’t observe this counterfactual, but it is consistent with the above observations. 
The second comment is more speculative ... Canada relies much more than
other countries on the type of “indirect” tax subsidies that we consider here, which
are generally available to all companies, as opposed to “direct” subsidies, such as
targeted grants. It could be that the nature of r&d subsidies in Canada—the reliance
on indirect tax incentives rather than direct grants—is the problem. ...
This leads to our third, and final, observation. To our knowledge, there is in fact
very little rigorous empirical evidence regarding the efficacy of direct versus
indirect government subsidies for r&d. Moving in this direction may well be the
right thing to do, but this seems to us to be based more on faith, and perhaps some
frustration with the Canadian “r&d policy puzzle,” than on solid empirical evidence.
Our hope is that the data presented here provide, at least in part, the basis
for additional research in this regard in a Canadian context. 
The authors conclude that their own ongoing research involves an empirical investigation of the effectiveness of direct and indirect incentives in promoting business r&d investment in Canadian
provinces.

I don't know whether the type of spending matters in terms of investment incentives. I would think that it matters what the spending is related to. For example, does spending a lot of money on companies to patent things actually lead to "innovation," whatever that word means? What I have read to date suggests not. There seems to be a strong connection of innovation spending toward traditional legal rights in copyright and patent, but these rights seem decreasingly relevant to many contemporary innovative business models.

Despite a general lack of empirical evidence that taxpayer dollars are well spent on R&D subsidies, governments everywhere spend and spend and spend to spur innovation. As a result empirical studies  that shed light on the efficacy of this spending will always be welcome. If the studies show that traditional modes of subsidizing R&D do not provide the intended results, the question is whether governments themselves will be willing and able to innovate in terms of how they support innovation. From the chronology presented herein and my own research on the topic, the prospects seem dim. I look forward to seeing more of this important research.


Tagged as: Canada innovation R&D scholarship subsidies

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Today at McGill: Brooks on Comparative Tax Law: Development of the Discipline

Published Dec 04, 2017 - Follow author Allison Christians: - Permalink

Today at McGill, Professor Kim Brooks will present her current work in progress as the final speaker of the 2017 tax policy colloquium at McGill Law. Here is the abstract:

The new millennium has inspired renewed interest in comparative law generally and comparative tax law in particular, with practitioners and scholars rapidly building the literature that defines the modern field. Despite the increase in authors undertaking comparative tax work, however, the contours of the theoretical and methodological debates lack definition; despite several leading articles that call on scholars to actively engage with each other on matters of approach, most scholars continue to “write alone”; and despite the increasing availability of thoughtful comparative law textbooks and monographs, tax scholars do not connect their work with debates in comparative law generally.

In this paper, I provide a foundation for future comparative tax law research. Part 1 reviews the major debates and theoretical directions in comparative law scholarship, focusing on the recent work in the field. Part 2 offers an intellectual history of comparative tax law scholarship, identifying the major contributors to the discipline of comparative tax law and conceptualizing the field’s development in five stages. Finally, Part 3 generates a taxonomy of modern comparative tax law research based on its
underlying purpose, explores how that work connects to the comparative law field, and identifies approaches to comparative tax law method, in the light of the work to date, that best advance tax knowledge.

The tax policy colloquium at McGill is supported by a grant made by the law firm Spiegel Sohmer, Inc., for the purpose of fostering an academic community in which learning and scholarship may flourish. The land on which we gather is the traditional territory of the Kanien’keha:ka (Mohawk), a place which has long served as a site of meeting and exchange amongst nations.


This fall, in celebration of the centennial anniversary of the introduction of federal income taxation in Canada, the Colloquium focuses on the historical significance and development, as well as the most recent challenges, of the modern tax system in Canada and around the world. 

The Colloquium is convened by Allison Christians, H. Heward Stikeman Chair in Taxation Law. 

Prof. Brooks' talk will take place from 2:35-5:35pm in the newly renovated Chancellor Day Hall Room 101, 3644 Peel Ave, Montreal. All are welcome to attend.

Tagged as: colloquium comparative law history international law McGill tax policy

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Next week at McGill: Van Apeldoorn on Taxation, Exploitation, and Human Rights

Published Dec 01, 2017 - Follow author Allison Christians: - Permalink

On December 6, Prof. Laurens van Apeldoorn of the University of Leiden will present a working paper at McGill, hosted by the Centre for Human Rights and Legal Pluralism at McGill Law and the Stikeman Chair in Tax Law (me). Here is the abstract:
Exploitation in global supply chains impacts prices that in turn bear on the allocation of corporate income tax revenue to jurisdictions where multinational enterprises transact. This presentation will develop a concept of exploitation based on the violation of the right to a living wage, put this in the context of discussions of transfer mispricing in multinational enterprises, and consider the economic dimension of the allocation of corporate income tax revenue in relation to public goods provisions in low-income countries where exploitation occurs.
Prof. Van Apeldoorn is currently visiting McGill’s Centre for Human Rights and Legal Pluralism as an O’Brien Fellow in Residence (Sept-Dec 2017). He is Assistant Professor of Philosophy and a member of the Centre for Political Philosophy at Leiden University, where his research broadly focuses on the nature and prospects of the sovereign state and more recently considers the principles of international taxation in relation to global justice. As some readers will no doubt be aware, Laurens' presentation connects to collaborative work he and I are undertaking that probes the meaning and significance of taxing income "where value is created," working paper forthcoming.

The talk will be held from 1pm to 12:30 with lunch being served beginning at 12:30, in Chancellor Day Hall, Stephen Scott Seminar Room (OCDH 16), 3644 rue Peel, Montreal, Quebec. This event is free and open to all.

Tagged as: justice McGill scholarship sovereignty tax policy transfer pricing

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Today at McGill: Mehrotra on value added taxation

Published Nov 20, 2017 - Follow author Allison Christians: - Permalink

Today, Ajay Mehrotra, Northwestern University and the American Bar Foundation, will present "The VAT Laggard: A Comparative History of U.S. Resistance to the Value-Added Tax, as part of the annual Spiegel Sohmer Tax Policy Colloquium at McGill Law. This is a fascinating topic as the United States considers major tax reform without explicitly embracing VAT as much of the rest of the world has done. Prof. Mehrotra's new project will explore the U.S. position in light of how Canada, Japan, and other jurisdictions were able to overcome historical resistance to a national VAT by adopting a Goods and Services Tax (GST).

The tax policy colloquium at McGill is supported by a grant made by the law firm Spiegel Sohmer, Inc., for the purpose of fostering an academic community in which learning and scholarship may flourish. The land on which we gather is the traditional territory of the Kanien’keha:ka (Mohawk), a place which has long served as a site of meeting and exchange amongst nations.


This fall, in celebration of the centennial anniversary of the introduction of federal income taxation in Canada, the Colloquium focuses on the historical significance and development, as well as the most recent challenges, of the modern tax system in Canada and around the world. The complete colloquium schedule is here.

The Colloquium is convened by Allison Christians, H. Heward Stikeman Chair in Taxation Law. 

Ajay Mehrotra's talk will take place from 2:35-5:35pm in New Chancellor Day Hall Room 101, 3644 Peel Ave, Montreal. All are welcome to attend.

Tagged as: colloquium history McGill tax policy

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Today at McGill: Tillotson on the Citizen-Taxpayer and the Rise of Canadian Democracy

Published Nov 06, 2017 - Follow author Allison Christians: - Permalink

On Monday November 6, Shirley Tillotson of Dalhousie University will present her new book,  Give and Take: The Citizen-Taxpayer and the Rise of Canadian Democracy, as part of the annual Spiegel Sohmer Tax Policy Colloquium at McGill Law.

The tax policy colloquium at McGill is supported by a grant made by the law firm Spiegel Sohmer, Inc., for the purpose of fostering an academic community in which learning and scholarship may flourish. The land on which we gather is the traditional territory of the Kanien’keha:ka (Mohawk), a place which has long served as a site of meeting and exchange amongst nations.


This fall, in celebration of the centennial anniversary of the introduction of federal income taxation in Canada, the Colloquium focuses on the historical significance and development, as well as the most recent challenges, of the modern tax system in Canada and around the world. The complete colloquium schedule is here.

The Colloquium is convened by Allison Christians, H. Heward Stikeman Chair in Taxation Law. 

Shirley Tillotson's talk will take place from 2:35-5:35pm in New Chancellor Day Hall Room 101, 3644 Peel Ave, Montreal. All are welcome to attend.

Tagged as: colloquium history McGill tax policy

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