Normativity in International Tax Law

Book overview

In this book, the author explores the theoretical underpinnings of international tax law, placing the current debates within the broader context of legal positivism, realism, and naturalism.

Winner of the 2022 Mitchell B. Carroll Prize awarded by IFA.

Key themes and topics

In recent times, the set of regulations governing cross-border scenarios, present in both income tax treaties and domestic tax codes, have come under intense political, academic and legislative scrutiny. Central to this global tax policy debate is the widespread assertion that the current distribution of taxing rights among jurisdictions is no longer suitable, being considered “outdated”, “inappropriate” and “conceptually flawed”. Initially tailored for a traditional “brick and mortar” economy, the rise of digitalization has made the system’s reliance on physical criteria for allocating taxing rights obsolete. Consequently, numerous reform proposals have emerged, aiming to address the inadequacies of the existing tax system and its underlying tax rules.

While the impact of digitalization on our daily lives is undeniable, the necessity of reforming international tax laws due to these changes raises pertinent questions. This book explores the underlying reasons why such reform is perceived as imperative, identifying three fundamental lines of reasoning shared by all reform suggestions. These arguments hinge on the principles of fairness and economic efficiency, asserting that substantial changes to corporate income tax, personal income tax, tax rates, tax deduction, and other aspects of taxation are essential. Moreover, the discussion consistently assumes that taxation demands justification.

However, the legitimacy of these claims, namely, why international tax laws must be fair and efficient and why taxation necessitates justification, remains ambiguous. The normative significance of these assertions and their potential legal relevance is taken for granted, leading to the core hypothesis of this book. According to this hypothesis, the international tax discourse lacks consensus and transparency regarding the understanding of normativity used in formulating these arguments. The book addresses this gap by examining the key assertions made in the debate through a legal theory lens. It places these claims within the spectrum of legal theories, ranging from Kelsian/Hartian positivism to Dworkinian interpretivism, and assesses the explanatory power of legal theory in establishing their legal validity.

This unique book aims to shed light on the nuances of international tax law reform, providing valuable insights for scholars, policymakers and practitioners in the field of taxation, with a focus on issues like tax liability, taxable income, double taxation, alternative minimum tax, wealth taxes, and how countries tax corporations and individuals.