Tax Levels, Structures, and Reforms: Convergence or Persistence

One of the central issues in comparative law and political economy is whether the forces of globalization will result in the convergence of public policies across countries. Noting in particular that taxes collected still cover a considerable range across industrialized countries -from a low of 20% of GDP to a high of 50% - some have argued that globalization has not resulted in a loss of tax sovereignty. However following a review of the evidence, in this Article we conclude that globalization has had significant but subtle effects on tax levels and structures. Moreover these pressures will make it increasingly difficult for countries to raise revenue to finance new public needs and to structure their tax systems in order to achieve a more socially acceptable distribution of income than what market forces dictate. Tax levels in most countries have remained essentially flat over the past twenty years, but there is a host of reasons for thinking they would have continued to rise were it not for the pressures of globalization. Statutory corporate tax rates have declined dramatically and, although corporate tax revenues have remained robust, this has been due to factors unrelated to deliberate tax policy choices. Personal marginal tax rates have also declined sharply and tax revenues have been increasingly raised by regressive consumption taxes. These trends stem from tax competition brought on by the forces of globalization, not from changing ideas or other political variables. In this Article we conclude that in order to prevent tax competition from completely eroding the ability of countries to fashion their own tax systems, there will have to be considerable cooperation among the major countries and some harmonization of aspects of their tax systems, particularly as they apply to footloose factors of production

GAAR in Action: An Empirical Exploration of Tax Court of Canada Cases (1997-2009) and Judicial Decision Making

This article presents a modest, exploratory empirical study of Canada’s general antiavoidance rule (GARR) in action. The study examines the entire body of GAAR cases decided by the Tax Court of Canada in the period 1997-2009, as well as certain personal and societal attributes of the judges who decided these cases. The findings support three tentative conclusions. First, GAAR has been a game changer, albeit a modest one, with respect to the courts’ approach to tax-avoidance cases. Second, while considerable uncertainty remains with respect to the application of GAAR, a pattern in judicial decisions appears to be emerging. Third, there are indications that a judicial smell test is at play in some GAAR decisions, in particular, judicial decision making in GAAR cases appears to have been influenced by the judge’s attributes, including experience on the Tax Court, gender, preappointment experience, and regional ties. Because the data sets examined in the study are very small, these findings are by no means conclusive. Nevertheless, the hope is that they will help to advance empirical understanding of GAAR in action

GAAR in Action: An Empirical Exploration of Tax Court of Canada Cases (1997-2009) and Judicial Decision Making

This article presents a modest, exploratory empirical study of Canada’s general antiavoidance rule (GARR) in action. The study examines the entire body of GAAR cases decided by the Tax Court of Canada in the period 1997-2009, as well as certain personal and societal attributes of the judges who decided these cases. The findings support three tentative conclusions. First, GAAR has been a game changer, albeit a modest one, with respect to the courts’ approach to tax-avoidance cases. Second, while considerable uncertainty remains with respect to the application of GAAR, a pattern in judicial decisions appears to be emerging. Third, there are indications that a judicial smell test is at play in some GAAR decisions, in particular, judicial decision making in GAAR cases appears to have been influenced by the judge’s attributes, including experience on the Tax Court, gender, preappointment experience, and regional ties. Because the data sets examined in the study are very small, these findings are by no means conclusive. Nevertheless, the hope is that they will help to advance empirical understanding of GAAR in action

Tax Levels, Structures, and Reforms: Convergence or Persistence

One of the central issues in comparative law and political economy is whether the forces of globalization will result in the convergence of public policies across countries. Noting in particular that taxes collected still cover a considerable range across industrialized countries -from a low of 20% of GDP to a high of 50% - some have argued that globalization has not resulted in a loss of tax sovereignty. However following a review of the evidence, in this Article we conclude that globalization has had significant but subtle effects on tax levels and structures. Moreover these pressures will make it increasingly difficult for countries to raise revenue to finance new public needs and to structure their tax systems in order to achieve a more socially acceptable distribution of income than what market forces dictate. Tax levels in most countries have remained essentially flat over the past twenty years, but there is a host of reasons for thinking they would have continued to rise were it not for the pressures of globalization. Statutory corporate tax rates have declined dramatically and, although corporate tax revenues have remained robust, this has been due to factors unrelated to deliberate tax policy choices. Personal marginal tax rates have also declined sharply and tax revenues have been increasingly raised by regressive consumption taxes. These trends stem from tax competition brought on by the forces of globalization, not from changing ideas or other political variables. In this Article we conclude that in order to prevent tax competition from completely eroding the ability of countries to fashion their own tax systems, there will have to be considerable cooperation among the major countries and some harmonization of aspects of their tax systems, particularly as they apply to footloose factors of production