THE USE OF NEUTRALITIES IN INTERNATIONAL TAX POLICY

This paper analyzes the use of neutrality conditions, such as capital export neutrality, capital import neutrality, capital ownership neutrality, and market neutrality, in international tax policy. Neutralities are not appropriate tools for designing tax policy. They each identify a possible margin...

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Bibliographic Details
Published in:National tax journal 2015-09, Vol.68 (3), p.635-651
Main Author: Weisbach, David A.
Format: Article
Language:English
Subjects:
Analysis
Capital gains tax
Capital income
Capital investments
Corporate income taxes
Direct taxes
Evaluation
Federal taxes
Fiscal policy
Foreign investments
Forum: Issues in International Taxation
Income taxes
International taxation
Laws, regulations and rules
Neutrality
Optimal taxation
Ownership
Studies
Tariffs
Tax policy
Taxation
Taxation systems
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Summary:This paper analyzes the use of neutrality conditions, such as capital export neutrality, capital import neutrality, capital ownership neutrality, and market neutrality, in international tax policy. Neutralities are not appropriate tools for designing tax policy. They each identify a possible margin where taxation may distort business activities. Because these neutralities cannot be all satisfied simultaneously, however, they do not allow analysts to determine the appropriate trade-offs of these distortions, unlike deadweight loss measures used in other areas of tax policy. International tax policy should instead be tied directly to the reasons for taxing capital income, reasons which are derived from optimal tax or similar models.
ISSN:0028-0283
1944-7477
DOI:10.17310/ntj.2015.3.06