[ad_1]
Tuesday, July 18, 2023
Kane & Kern: The Use And Abuse Of Location-Particular Hire
Mitchell Kane (NYU) & Adam Kern (NYU), The Use and Abuse of Location-Particular Hire, 76 Tax L. Rev. __ (2023):
Worldwide tax legislation divides taxing rights amongst nations. A really perfect allocation of taxing rights would (i) allow nations to lift substantial quantities of income; (ii) permit them to take action effectively; and (iii) assign rights pretty. The conceptual foundation for such an allocation could be the holy grail of worldwide taxation.
Many tax students consider that they’ve discovered the grail. They are saying that it’s the idea of location-specific lease. A location-specific lease is a return to an element of manufacturing that exceeds what the issue’s holder requires to deploy the issue to a selected location. A considerable amount of location-specific lease doubtless exists. In principle, taxes on location-specific lease are troublesome to keep away from and are environment friendly. And, since location-specific lease can solely be earned in a single location, every location-specific lease appears to be made potential by one explicit society. For that cause, it strikes many students as truthful that every nation ought to have the unique proper to tax the location-specific lease that originates in it.
On this article, we push again on this rising consensus.
Our first contribution is to make clear what location-specific lease is, as we offer the primary rigorous definition of location-specific lease to look in both the authorized or the financial literature. Second, drawing on this definition, we present that location-specific lease isn’t the holy grail of worldwide taxation. The enchantment of location-specific lease rests on two key assumptions: (a) location-specific lease is measurable and (b) every location-specific lease is made potential by one explicit society. Each of these assumptions, we present, are sometimes false.
Third, and extra positively, we determine a modest function for location-specific lease in worldwide tax coverage. In some particular contexts, the sensible hurdles to measuring location-specific lease are surmountable. Furthermore, since location-specific lease will be taxed effectively, all else being equal, it’s good to extend nations’ combination capability to tax location-specific lease. Continuously, nonetheless, all else isn’t equal: typically, rising one nation’s capability to tax location-specific lease will come on the expense of people that dwell out of the country, or we should select which nation must have the proper to tax some location-specific lease. To deal with these conditions, we have to depend on a basic principle of world distributive justice. Such a principle most likely wouldn’t indicate that every nation has a particular or superior declare to tax the location-specific lease that originates in it.
https://taxprof.typepad.com/taxprof_blog/2023/07/the-use-and-abuse-of-location-specific-rent.html
[ad_2]