Tuesday, October 21, 2014

The Importance of Corporation Tax Policy in the Location Choices of Multinational Firms

The Irish Department of Finance released this report yesterday in connection with its 2015 budget. The report considers data on newly established multinational subsidiaries across 26 European countries from 2005 to 2012. Here are a few key points from the executive summary:
  • We find a consistent negative effect of the corporate tax rate on the probability of a country being chosen as a location by multinationals. 
  • We find a highly significant, albeit modest sized, effect of allowing for non-linearity in the effect of the tax structure. In other words, a change in the tax rate will have a larger effect if the starting point is a low rate of tax compared to if the same size change is applied to a higher tax rate.
  • We find large variations in the sensitivity to tax rates across sectors. For manufacturing firms, the effect is similar to the baseline but for service firms the effect is noticeably smaller. Services firms may be more likely to make location decisions based on the need to be close to their identified customer base and this reduces their sensitivity to tax rates. 
  • When comparing the effect of taxation to other important factors, we find that taxation is the largest single determinant of the location decision. 
  • Financial sector firms are most sensitive to changes in corporation tax rates, with an estimated marginal effect more than double those of the other sectors. This is likely to be a reflection of the more footloose nature of these firms, and has important implications for the potential effect of a tax change in Ireland, given the weight of the financial sector in foreign investment in this country. Firms with higher assets sizes appear more responsive to corporation taxation in their location decision. 
  • Combining all effects of tax and country characteristics, Ireland had a 3.1% probability of being chosen as a location for the newly established subsidiaries over the period investigated. For context, Irish GDP is 1.4% of the EU-26 total, so this demonstrates the attractiveness of the country as a destination for foreign investment well in excess of its size. 
  • If the Irish tax rate had been 15% over the period in our sample, the number of new foreign affiliates entering the country would have been 22 % lower. 
  • If the tax rate had been 22.5% (the sample average), the number of new foreign affiliates would have been 50 % lower. 
The idea that Ireland will really give up its favorable tax regimes under external pressure just seems implausible as a result. I know, Ireland is going to repeal the residence rule that gave rise to the double Irish. But there's always the double dutch not to mention an alarming proliferating of patent boxes so that means Ireland will have to come up with something else. If the US, the UK, the Netherlands, etc. aren't going to give up their goodie bags, it is difficult to see Ireland doing so.

Monday, October 20, 2014

BEPS Monitoring Group Scorecard

The BEPS Monitoring Group, a consortium of tax justice folks who are watching the OECD as it works through its ambitious reconfiguration of the global tax consensus, released a report today, of interest. The indefatigable Sol Picciotto is the lead author. From the announcement:
Our overall evaluation is that while significant progress has been made, there have been some unhappy compromises, some obstacles encountered, and much remains to be done. Also, fundamental problems still remain. The OECD alone is not the appropriate body to revise global rules, and its approach has been to patch up the existing rules. Effective reforms will not be possible without reconsidering some of the foundations of the system designed 80 years ago. Today’s globalized economy requires a more global approach to apportionment of the tax base of multinationals. Changes in the rules should be geared towards treating multinationals as unitary enterprises which would reflect their economic reality.
I agree with Sol that the OECD is not the appropriate body to revise global rules, and this is because revising the global rules really requires revisiting the basic framework. If the framework is fundamentally flawed, which I believe it is, then going back to the same architect again and again for yet another renovation project appears to be folly. But the OECD has worked hard to make itself into a tax policy monopoly, so this is a predictable result. On this point, Sol says:
A project led by the OECD even with participation of other G20 countries is still an unsatisfactory way to agree global tax rules, and the underlying problem still remains that the Action Plan aims to patch up existing rules rather than re-examine their foundation. 
The views of states not directly involved in the process, especially the poorer developing countries which are more dependent on corporate tax revenues, need to be taken into account much more directly, and we will carefully scrutinize the OECD proposals to address this which are promised.
He observes that so far, the OECD appears unwilling to consider any revisit of the underlying international tax principles, namely, the residence-source split, even though we can clearly see that this split isn't doing the work it needs to do to allocate the global tax base (especially when it comes to the corporate income tax).

My view is that everyone who will be affected by the global tax consensus has a right to be involved in the conversation, while the OECD's basic exclusionary nature ensures that only those who happen to live in rich countries will have any representation. The UN Tax Committee is an obvious alternative policy space. Sol says: "Instead of trying to usurp the UN, the OECD should support an
upgrading of the UN Tax Committee. All states should have full rights of participation in the negotiation of the proposed multilateral convention, which should  not be limited to rubber-stamping the outputs of the OECD BEPS project." That sounds right to me.

But it's hard, messy, probably dreary and frustrating work that will involve a lot of time and effort, and in the meantime...what? As I said in my talk last week, we all know that in international tax, as in most other regulatory areas, powerful states don't have to wait, they can simply do what they want.  But can is not ought.  I think the OECD should keep working on BEPS but everyone ought to be working equally diligently toward comprehensive multilateralism even as the OECD puts together this latest patch, so that the next step in international tax relations is not another recall of the same architect, with the same blueprint.

Sol's report has a clear mission: get the OECD to take formulary apportionment seriously, as the "clear lodestar" to all the BEPS efforts. Maybe so; the naysayers have their points. But for me the strongest part of this scorecard is its observation that the process matters, that we need to keep talking about participation in governance and thinking about who is making the decisions about which voices will be heard.


Today at McGill Law: Joseph Heath on Taxation as Collective Consumption

Professor Joseph Heath, Professor of Philosophy, University of Toronto, joins us today as the second speaker in the McGill University Speigel Sohmer Tax Policy Colloquium. Professor Heath is drawing from his book, Filthy Lucre: Economics for People Who Hate Capitalism, (released in the US as "Economics without Illusions: Debunking the Myths of Modern Capitalism"), where he writes about viewing taxation as a "club good":
Individuals express a surprisingly pervasive error that I refer to as the “government as consumer” fallacy. The picture underlying this fallacy is relatively straightforward. Government services, such as health care, education, national defense, and so on, “cost” us as a society. We are able to pay for them only because of all the wealth that we generate in the private sector, which we transfer to the government in the form of taxes. A government that taxes the economy too heavily stands accused of “killing the goose that lays the golden eggs” by disrupting the mechanism that generates the wealth that it itself relies upon in order to provides its services. Thus the government gets treated as a consumer of wealth, while the private sector is regarded as a producer. This is totally confused. The state in fact produces exactly the same amount of wealth as the market, which is to say, it produces none at all. People produce wealth, and people consume wealth. Institutions, such as the state or the market, neither produce nor consume anything. They simply constitute mechanisms through which people coordinate their production and consumption of wealth.
Heath has also pointed us to Todd Sandler's work on "Buchanan clubs."

 The presentation will take place in the Seminar Room of the Institute for Health and Social Policy, Charles Meredith House, 1130 Pine Ave., Montreal, beginning at 2:35 pm.

As always, the colloquium is open to all: students, faculty and the general public are welcome.

Sunday, October 19, 2014

Peers complain banks treat them 'like pariahs'

From the BBC: "Members of the House of Lords have complained they are treated like "deposed dictators or political pariahs" when they try to open bank accounts."

More:
Peers said they were falling foul of money-laundering regulations because banks classed them as high-risk "politically exposed persons". 
This makes them, and their relatives, subject to extra due diligence checks. 
Treasury Minister Lord Deighton said banks were acting "disproportionately". 
He said UK parliamentarians were not currently classed as politically dependent persons, which are restricted to members of foreign governments, but added that new global standards "will require that they are treated as such".
 I know a few people who can relate to this feeling.

Wednesday, October 15, 2014

Fixing Global Tax Disorder: Multilateralism vs. U.S.-Led Effort

Tax Analysts has a write-up [gated] of the international panel from last week's conference on Reforming Entity Taxation, in Boston. Excerpts:
"What we have now is a mess," Robert Peroni, a professor at the University of Texas School of Law, said October 10, referring to the international tax system. 
... A discussion of how to go about cleaning up that mess pitted multilateralism against a U.S.-first approach. Panelists appeared to share the realpolitik view that whatever course is followed, dominant actors have called the shots for decades and will probably continue to do so. 
According to Allison Christians of McGill University Faculty of Law, the problems addressed by the conference's panel on international taxation are not much different from those faced by four academics more than 90 years ago when asked by the League of Nations to study the question of how to share the world's income tax base. Christians said the crucial issue now is the failure to tax income as opposed to double taxation, which worried policymakers then. 
"If you gave international tax a grade over 90 years, it would be an F," Christians said. 
"We will not take fairness seriously on the international stage." 
Christians said that powerful countries too often end up calling the shots, much to the detriment of a fair and orderly international tax system. "When we turn to power, we sacrifice both efficiency and equity . . . and administrability as well," she said. 
Christians was especially critical of the U.S. for using the Foreign Account Tax Compliance Act to expose underpayment of U.S. personal income taxes while cautioning that the OECD's base erosion and profit-shifting initiative could negatively affect U.S. multinationals. 
"FATCA leverages U.S. control over the global financial system, thereby forcing the populations and governments of poorer countries to direct precious tax administration and regulatory compliance resources toward the enforcement of the U.S. tax system over their own," Christians said. "Yet the U.S. has not used this same leverage to respond to base erosion. U.S. lawmakers have not seen as great a good in stopping tax avoidance by U.S.-based corporations as they have in stopping tax evasion by U.S. individuals." 
...While advocating multilateralism, Christians admitted that there is a significant risk in changing course that could prove detrimental to U.S. interests. She said that it might be in the best interest of the U.S. to act while it still has policy flexibility to shape a future international tax regime in which it might not play as dominant a role.
"Someday there might be a global power shift," Christians said. "We might wish we built a structure when we had a chance." [I believe i said an "appropriate" governance structure"] 
Christians' co-panelists placed less emphasis on multilateralism. ... Peroni said that what the world needs now is a "real worldwide" income tax regime rather than a territorial system. "Territorial undermines fair allocation of burden, and should only be enacted if its efficiency and simplification benefits outweigh its costs in terms of fairness," he said. 
Peroni said competitiveness should be defined not in terms of improving the after-tax profits of already successful U.S. multinationals, but in terms of citizens' living standards. He stressed the importance of fairness -- both actual and perceived -- in any reforms to the federal income tax and warned that simplification would probably be given short shrift. 
"Significant simplification in the international corporate tax area may be difficult to achieve because the transactions involved are often inherently quite complex and, therefore, the tax rules dealing with such transactions are likely to have a certain degree of unavoidable complexity," Peroni said. 
Peroni said that calls for formulary apportionment of international income could result in U.S. multinationals moving operations and jobs to low-tax foreign countries.

...Martin Sullivan of Tax Analysts said that U.S. moves to curb tax shelters by stressing  economic substance can often have a similar effect. "It is so ingrained that deals without economic substance have to be bad," Sullivan said. Comparing the paper companies often set up in Bermuda with real operations established in low-tax Ireland, Sullivan wondered why Ireland is considered better from a U.S. point of view. "Would it be better if there were 40,000 factories in Bermuda?" he asked.  
... The panelists weren't optimistic about the prospects for international tax reform. Peroni said "no sensible president" would push for reform during his or her first term. "If a president is not reelected, this could go on forever," he said. "You might be able to do a few antiabuse provisions . . . but that's a Band-Aid on the problem," Peroni said.
Christians emphasized the central role and responsibility of the U.S. should the world opt for a multilateral approach. "With great power comes great responsibility," she said.

Thursday, October 9, 2014

Will media scrutiny for tax dodging ultimately create director liability to shareholders?

It's been a busy couple of weeks in Europe for some of America's biggest multinationals.

Google’s tax setup challenged by France

European commission to probe Amazon’s tax status in Luxembourg

Europeans Accuse Ireland of Giving Apple Illegal Tax Break

I'm working on an article in which I argue that the scrutiny over tax avoidance is creating material financial risk for multinationals, such that existing national securities disclosure laws will ultimately require increased disclosure to shareholders about public companies' tax planning strategies and their associated risks. To date, share prices have not seemed to reflect any market worry about the anti-tax avoidance activity governments have proclaimed so far. But if these stories about probes turn into stories about assessed fines and other clawbacks (as opposed to Starbucks'-style faux-repentance gifts), my level of confidence in my prediction will vastly increase.

Dawn of the Delta: Taming International Derivatives Tax Abuse

I recently contributed to the Columbia Tax Journal's Tax Matters Series, on Congress' attempt to constrain a particular form of international tax avoidance. The constraint in question is a fairly technical provision found in 871(m), which was enacted as part of the 2010 HIRE Act (also the source of the Foreign Account Tax Compliance Act). You can find my overview at the link above, where I explain what section 871(m) was intended to achieve (it is an anti-abuse rule to stop people avoiding dividend withholding taxes) and how Treasury sought to achieve it with a test (called the delta test), and observe that this test has prompted criticism for being too broad, capturing more transactions than intended. I asked the practitioners to address the mischief of the over-breadth and what could be done to overcome this but still achieve the legislative aims. The practitioners responded as follows:

Section 871(M) and Delta: When Should a Dividend Equivalent be Treated like a Dividend?
By Mike Farber

Taxation Without Authorization: The Proposed “Dividend Equivalent” Withholding Regulations Under Section 871(m)
By Linda Z. Swartz, Shlomo Boehm, and Jason Schwartz

The Most Recent Proposed Regulations Under Section 871(M): The Perfect is the Enemy of the Good
By Andrew Walker Read DOC or PDF

Enjoy.


Wednesday, October 8, 2014

Reforming Entity Taxation

Boston College is hosting a conference on Reforming Entity Taxation this Friday; I'll be on the international panel where I'll be giving a paper I've entitled "Who's Got the Power: Dividing the Global Income Tax Base." My theme: reforming entity taxation is purely about the political will of powerful states, perhaps especially the US. It is often repeated that with great power comes great responsibility. I argue that powerful nations have fallen far short on living up to the latter. I take a look back at how the League of Nations started the inquiry into how nations ought to share the global income tax base but ended up answering the question with power instead of principles, and how today's mix of FATCA, BEPS and the Baucus plan demonstrates that we are still doing the same thing today. I'll post a draft soon. Here is the lineup for Friday:

Keynote Speaker: Lee Sheppard (Contributing Editor, Tax Analysts)                            

Reforming Entity Taxation: Corporations

Mirit Eyal-Cohen (Alabama)
Deborah Schenk (NYU)
Dan Shaviro (NYU)
Brian Galle (Boston College) Commentator
Jeremy Scott (Editor in Chief of News, Tax Analysts) Moderator

Reforming Entity Taxation: Partnerships

Karen Burke (Florida)
Andrea Monroe (Temple)
Gregg Polsky (North Carolina)
James Repetti (Boston College) Commentator
Amy Elliott (Contributing Editor, Tax Notes) Moderator

Reforming Entity Taxation: International

Allison Christians (McGill)
Robert Peroni (Texas)
Martin Sullivan (Tax Analysts)
Diane Ring (Boston College) Commentator
Sam Young (Editor Worldwide Tax Daily) Moderator

Destination: Silicon Valley North

I took part in the latest McGill Law Journal Podcast, this time to talk about tax incentives and innovation. Have a listen.

Sunday, October 5, 2014

Tomorrow at McGill Law: Apple's Tax Planning, through a Philosopher's Lens

Tomorrow at McGill: Wayne Norman, Mike & Ruth Mackowski Professor of Ethics at Duke University, will be here to present the inaugural lecture of the McGill University Spiegel Sohmer Tax Policy Colloquium. He will be talking about how we ought to think about the social pressures coming to bear on multinational tax avoidance, with a special focus on Apple. His presentation is entitled "Corporate Tax and Beyond-Compliance Norms."

Using the media's recent coverage of Apple's tax avoidance strategies as a case study, Professor Norman will discuss how we ought to understand and rationalize corporate social responsibility and self-regulation norms emerging around the taxation of multinationals, and whether these rationalizations are, or should be, different than the rationalization of corporate tax regulation. He will draw upon his previous work on business ethics, including "Business Ethics as Self-Regulation: Why principles that ground regulations should be used to ground beyond-compliance norms as well," and he points us to a 2012 NY Times article by Louise Story, As Companies Seek Tax Deals, Governments Pay High Price.

The topic is obviously timely. If you've been watching the news, you know that it has recently been revealed that Apple and governments get along very, very well when it comes to taxes. In Europe, Apple's side deals with Ireland have come under scrutiny as a possible form of state aid, against EU law; in the United States, Apple has faced lawmakers' bark but no bite. Here is some recent media coverage, most from the Guardian:
I have been saying for some time that even after a century of study, we have yet to articulate a principled way to allocate the global income tax base, and we ought to ask philosophers for help. I am pleased that Professor Norman will engage on the topic.

The presentation will take place in the Seminar Room of the Institute for Health and Social Policy, Charles Meredith House, 1130 Pine Ave., Montreal, beginning at 2:35 pm.

As always, the colloquium is open to all: students, faculty and the general public are welcome.

Monday, September 15, 2014

Leaving money on the table to avoid extra paperwork

Economist Youssef C. Benzarti has recently posted an article on SSRN, How Taxing is Tax Filing? Leaving Money on the Table Because of Compliance Costs, in which he that "taxpayers forego $800 on average to avoid the cost of itemizing."

Can this really be true? It is hard to imagine given that for resident filers, at least, plenty of cheap tax help is available all around, and itemizing is merely a question of gathering receipts and punching in numbers (If the sample includes a lot of US persons permanently living abroad who don't understand their US tax filing obligations, I could understand the choice to bear higher taxes out of a fear of getting things wrong). It's not like most people are sitting around their kitchen tables calculating things out themselves; but even if they are, it's not really THAT hard, is it? In any event, here is the abstract, worth a closer read. If the analysis is correct, it bolsters the case for worrying about complexity as a second level of tax that is allocated without regard for ability to pay.
I use a quasi-experimental design to estimate the burden of complying with the tax code. Employing a sample of US income tax returns, I observe the preferences of taxpayers over itemizing deductions or claiming the standard deduction. Treated taxpayers forego $800 on average to avoid the cost of itemizing. A revealed preference argument implies that itemizing deductions is as painful as working more than 17 hours at one’s regular job. The amount of foregone benefits is larger for richer households, consistent with the fact that the value of time increases with income. I explore two explanations of the magnitude of the estimates. First, it could be due to an extreme aversion to filing taxes. Such aversion implies that itemizing deductions imposes an aggregate compliance cost of 0.24% of GDP and an extrapolation to filing federal taxes implies that the overall cost of compliance is 1.55% of GDP. Second, if taxpayers are time-inconsistent the revealed preference argument fails, introducing a wedge between foregone benefits and compliance costs. Being present-biased leads taxpayers to forego large benefits even when compliance costs are relatively small. I provide evidence of taxpayers being present-biased. Both explanations - whether driven by preferences or mistakes - suggest that the burden imposed on society by tax compliance is significantly larger than previously estimated. I discuss policy implications of the result.

Friday, September 12, 2014

This Fall at McGill: Colloquium on Tax Philosophy

I am pleased to announce that the annual McGill tax policy colloquium is now being generously supported by the law firm Spiegel Sohmer, Inc., under a grant established for the purpose of fostering an academic community in which learning and scholarship may flourish.

This fall, in its inaugural instalment, the Spiegel Sohmer Tax Policy Colloquium will return to tax policy fundamentals by critically examining the goals of taxation from a law and philosophy perspective.

The Colloquium will therefore be convened jointly by myself and Daniel Weinstock, who is the James McGill Professor in the Faculty of Law and Director of the McGill Institute for Health and Social Policy.  His research explores the governance of certain types of liberal democracies, and the effects of religious and cultural diversity from an ethical perspective on the political and ethical philosophy of public policy.

Each talk takes place in the Seminar Room, Institute for Health and Social Policy, 1130 Pine Ave, from 14:35 to 17:35.  These events are free and open to everyone. We welcome students, faculty and the general public to attend. Here is the line-up:

Monday, October 6: Wayne Norman, Mike and Ruth Mackowski Professor of Ethics, Kenan Institute for Ethics and Department of Philosophy, Duke University. His work focuses on business ethics and his published work includes numerous books and journal articles, as well as contributions to “Ethics for Adversaries: How to Play Fair When You’re Playing to Win.”

Monday, October 20: Joseph Heath, Professor in the Department of Philosophy and the School of Public Policy and Governance at the University of Toronto; Director of the University of Toronto Centre for Ethics. He has published work very widely including the recent book "Enlightenment 2.0: Restoring Sanity to Our Politics, Our Economy, and Our Lives."

Monday, October 27: Patrick Turmel, Professor in the Department of Philosophy, Laval University. His work focuses on ethics and political institutions, particularly cities. His publications include co-authorship of a book titled “La Juste Part: Repenser les Inégalités, la Richesse et la Fabrication des Grille-Pains.”

Monday, November 11: Martin O’Neill, Senior Lecturer in Moral and Political Philosophy, Department of Politics, University of York, U.K. His research examines global and intergenerational justice. Among his many publications, Professor O’Neill’s most recent book is “Property-Owning Democracy: Rawls and Beyond.”

Monday, November 17: Peter Dietsch, Professor, Department of Philosophy, Université de Montréal. He works on questions of distributive justice with particular emphasis on the application of philosophical theories through social instruments including the tax system. His work is widely published, including a recent article titled “Tax Competition and Global Background Justice” in The Journal of Political Philosophy. He is also working on a book on tax competition entitled “Catching Capital”.

I am looking forward to hearing what these pre-eminent philosophers can tell us about the state of contemporary tax policy theory. Over the course of the semester it is my hope that we can develop a framework for thinking about tax policy that responds to the world in which we find ourselves today, with all of its promises and challenges for democracy, economy, and identity.

Friday, September 5, 2014

The power to tax

The start of a new semester means the return to fundamentals in taxation for me, which always begins with a discussion of the power to tax. Yesterday I asked my students: could Queen Elizabeth say hey Canadians, I notice you still have my face on your dollar and you've got a nice surplus shaping up; over here in England it's all austerity and program cuts. Mind helping out a bit? General consensus: she might as a legal matter be able to tax Canadians to help the Brits out, but she won't. Hmmm. During the discussion a student informed me that Canadians pay more for monarchical services than the Brits do. Well, sharing is caring.

Relatedly and on a more scholarly note, a recent twitter conversation brought me to a chapter in a book on socio-legal tax research (thanks to Martin Hearson for starting that conversation and Judith Freedman for making this recommendation). The book is called Taxation: a Fieldwork Research Handbook, edited by Lynne Oats, and the chapter I had my eye on today is entitled Tea Parties, Tax, and Power, by Rebecca Boden. Boden writes:
History...points to a longstanding power relationship between rulers and those they rule that is articulated through tax regimes. States, whether feudal or modern, need money to operate, to pursue their various programmes, from war to welfare, As citizens may be unwilling to relinquish their money voluntarily, the state must have powers to require payment, with sanctions for non-compliance. By the same token, this power is held in balance in democracies by the principle of consent, exercised through representation. Ultimately, taxpayers give their consent to be dominated and have their money taken away from them.
This contingent nature of the state's powers in taxation - taxation by "consent"- chimes with Foucault's notion that power can never be absolute (Foucault 1977). No, Foucault argues, is power only hierarchical or structural, rather it works in a capillary fashion. As such, the analysis of such power relationships is central to the critical tax project - only by viewing tax structures, policies, and practice through the prism of power relationships that change them can we understand how and why they are constituted and what their effects are likely to be.
There is much more in the chapter to reflect upon, but I found this intro intriguing. In my view a lot of mischief takes place in the subtle--maybe you missed it--transition from the use of the word "citizen" to the use of the word "taxpayer." This is a transition all too many scholars make without even noticing it, yet it masks a world of ideology and assumption that frame and define how we think about tax today.

The power to define the taxpayer permeates contemporary tax policy discussion. The question of who can tax whom is one that could or should involve theory but while the scholars talk it over, reality plays out in economic might. In an intro to tax policy principles that I recently prepared for my tax policy course, I wrote:
Perhaps because taxation has been so connected to state-building, most scholars closely associate the act of taxation with the state. Some even go so far as to argue that taxation is a fundamental right belonging to the state as sovereign, often citing Thomas Hobbes for the proposition that “[t]hese are the rights which make the essence of sovereignty … the power of raising money”. None have offered theoretical grounds for the claim that states are in fact holders of rights, however.
We observe throughout history that states exercise powers (mostly through military and economic might), and only declare rights for themselves upon successful domination (such as in constitutions and charters). This observation leads to the likelihood that taxation is not anyone’s right but rather it is a constructed reality, coming about solely by and through human experience. This would explain why so much has to be done to both justify as a matter of theory - and entrench as a matter of custom - the state’s authority to tax.
We don't have to work too hard to think of a few examples where defining the taxpayer is an exercise in claiming authority, which fundamentally depends on power. FATCA is an obvious one; anti-inversions, BEPS, and the OECD common reporting standard are less obviously but equally so.

With FATCA, the US is using its sheer economic clout to get the whole world involved in chasing what it deems to be "US persons" for their tax tribute, without any discussion about whether the state's unilateral conferring of citizenship constitutes consent to (permanent and worldwide) taxation. Indeed, it continues to erect ever-higher barriers to shedding that status, without a single policy discussion at any level of government about the merits of this action. Those who think not can be expected to resist per Foucault, or, if it suits your taste better, Locke:
[People] therefore in society having property, they have such a right to the goods, which by the law of the community are their's, that no body hath a right to take their substance or any part of it from them, without their own consent: without this they have no property at all; for I have truly no property in that, which another can by right take from me, when he pleases, against my consent.
At the OECD, the common reporting standard, ostensibly modeled on FATCA but in fundamental principles not at all like FATCA, is all about making sure the "right" government gets the info it needs to exert its power over "its" taxpayers. Same idea: a state claims the authority to tax people that live within its territory, but other states have the power to thwart that exercise. (Different in fundamentals than FATCA for two reasons: (1) finding implied consent to tax is a given for residents of a state and (2) the OECD is not currently suggesting countries use economic sanctions to force others to cooperate).

The anti-inversion and BEPs issues are similarly about exerting power over a "taxpayer." Despite bemoaning their apparent helplessness in preventing corporate US persons becoming corporate non-US persons, US lawmakers clearly claim the authority to intervene and they likely have the power, too. But, this involves erecting higher and higher walls to keep the "taxpayers" inside. Internationally, discussions about the global problem of multinational tax dodging focus on the failure of the state to tax corporate persons that come in to the jurisdiction to do business. At the OECD, the BEPS project is very much about who belongs to who, so we can decide what belongs to who. Source and residence as tax concepts have always been about power and they have always been explained with ideas about authority and consent.

Globally, discussions about both corporate and personal income taxation are being forced to focus more and more on unanswered questions about the power to tax, and the issues of authority and consent that are raised when power is exerted and when it is resisted. The full Boden chapter is thus definitely recommended reading and I'm working my way through the rest of the book, which looks promising in several respects. More to come on this subject.