Two Principles for Tax Cooperation

Abstract

The goal of this chapter is to lay the groundwork for the arguments that follow throughout the remainder of this book. The role of taxation in securing justice in the context of a global economy characterized by international capital mobility is examined. The starting point is a widely (though hardly universally) endorsed view of international justice that accepts the existence of independent states on the world stage under the so-called society-of-states model of international justice. The purpose of cooperation on international taxation is identified in terms of two complementary aims autonomous states have in a globalized economy: on the one hand, the pursuit of national wealth through the facilitation of international capital mobility, and on the other hand the continued protection of their political autonomy. It is argued that the first aim gives rise to fairness questions regarding the distribution of the benefits of this cooperation (the ‘cooperative surplus’) between the cooperating states. It is suggested that there are two principles of international justice that can resolve these fairness questions: the entitlement principle and the equal benefit principle. It is argued that the second aim requires that these principles be implemented in a way that allows states to remain politically autonomous, which in practice requires that they remain capable of pursuing income taxation. In the next chapter, some of the main obstacles to achieving these aims are considered and the prospects for removing them.