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While tax competition is widely regarded as a major fiscal constraint on the welfare state, in fact, very little is known about its real impact. How have advanced industrialized states reacted to the growing mobility of parts of their tax base? To what extent has tax competition resulted in a shift of burdens to less mobile tax bases? In answering these questions, the article identifies the different shape and force of tax competition in different areas of taxation, and the differing ways in which countries have responded. The conclusion is that the pressures of international tax competition are real, but so are countervailing economic and political pressures that work against a general ‘race to the bottom’ in the taxation of potentially mobile bases. At the same time, revenue‐preserving adjustment strategies have prevented large‐scale revenue losses at the price of creating politically more controversial structures of taxation.

The choice of tax base–income, consumption, wealth–is an instrumental one: it depends upon the efficiency and justice of the outcomes different tax bases promote. Traditional fairness-based arguments for the consumption base–for example, that it is fairer to savers, or appropriately taxes according to what is taken out rather than put into the “common pool”–all suffer from the everyday libertarian mistake of treating the pretax distribution as morally significant. But there are important philosophical questions to be asked about the value of wealth and the legitimacy of taxing endowment (potential rather than actual income).

Treats two sweeping tax reforms starting from the late 1980s, that is to say, that for 1987–93 and that for 1994–99. It is important to explore the reasons leading up to a need for major reforms and the contents of reform packages. Reform plans of three direct taxes, such as the individual income tax, the corporate tax, and the inheritance tax, are mainly discussed in detail.

Assesses the overall performance of past tax reforms thathas developed in three stages; the Nakasone and Takeshita reform packages from the mid‐1980s, and recent tax reform in the 1990s. From an academic point of view, as the final conclusion, Japan's tax reforms have been far from satisfactory, and further steps are required to improve with regard to equity, neutrality, and simplicity.

Tries to estimate the phenomena of eroding income tax base and revenues caused by a number of special provisions for specific seven years. Obviously, tax erosion impairs the equity of the existing income tax system.

Basic Structures of the individual income tax are examined in various ways. Throughout the post‐war period, the income tax has reigned in the Japanese tax system, occupying a significant portion of its tax revenues. Thus, it is very important to clarify main structures of such a tax.

This chapter distinguishes between three sorts of polities. The first are strong states, such as the Roman empire and its Byzantine and Arab successors, based on taxation and a paid army as an independent resource for political power. The second are the weak states, such as the major Romano–Germanic kingdoms of Frankish Gaul, Lombard Italy, and Visigothic Spain, with a landed army but also a strong sense of public power acting as a focus for political legitimation. The third are pre-state systems of the northern world, such as the kingdoms of England, Wales, Ireland, and Denmark. The discussion focuses on the differences between strong and weak states, the basic difference being in the role of taxation. It looks to establish a set of parameters between the economic structures of political systems, inside the broad categories of strong, tax-based states and weak, land-based states.

This chapter addresses those exceptions that apply in intra Community and third-country contexts alike, i.e., Article 58 (1) lit. b EC and the ‘rule of reason’ (unwritten exceptions). Within this context, the operation of the proportionality test is considered. Article 58 (1) lit. b. EC contains three different groups of grounds of justification. Each group of grounds of justification is addressed in this chapter separately with respect to its scope of application, predominantly with attention given to the first and third groups, which are the most relevant ones in practice. Within the first group, the focus is placed on national measures securing effective fiscal supervision and preventing tax evasion and avoidance. They carry great potential for protectionist interferences with direct investments, though not constituting a phenomenon specific to this economic activity. The discussion in the context of the third group, referring to the ordre public exception, revolves around the question of whether and to what degree it allows the Member States to self judge their requirements of public policy and public security. The ordre public clause constitutes the most important potential legal basis for saving national measures aiming specifically at the restriction of cross border direct investment. In regard to the rule of reason, its scope in the ambit of free movement of capital is set out first, thereby focusing on the question of whether the formula applies only to hindering or also to discriminatory national measures. Second, the chapter elaborates on mandatory requirements accepted and refused by the Court. In doing so, particular attention is paid to the recognised mandatory requirement of fiscal cohesion and the refused one of securing the tax base; both play a significant role later, in the discussion on the operation of the rule of reason in a third-country context.

This chapter examines the evolution of corporate taxation primarily (but not only) in the G7 countries with respect to the definition of a corporate taxpayer, corporate residency, corporate tax rates, corporate tax base, corporate/shareholder integration, and a few other categories. It questions whether this trend of convergence is still prevailing today.

This chapter addresses the starting point of any study on income tax: the definition of income as the base of the tax (the subject matter on which the tax is imposed). First, it discusses the two main concepts of taxable income, the source concept and the accretion concept, and the two main methods countries use to define the tax base, the exclusion (a “global” definition of income) or the inclusion (a “scheduler” definition). The chapter then reviews some of the major problems of defining income in the US income tax system and juxtaposes US solutions against those used by other countries. Finally, it discusses the idea of the realization requirement, which has been described as the “Achilles' heel” of income tax.

This chapter focuses on some of the main insights gained from optimal tax analysis for policy. The discussion covers the uniformity of commodity taxes; production efficiency; capital taxation and the personal tax base; progressivity; asymmetric information and market failure; and policy lessons from normative analysis.

This chapter considers the return-based mass tax as a vehicle for not paying taxes, in the case of tax protesters and tax cheaters. Income tax has been used extensively as a vehicle for protests by those at both ends of the political spectrum. A tax protest requires a tax that gives the taxpayer a choice as to whether to comply. The return-based mass tax gives that choice to almost everyone. Although there are obvious arguments against a tax system highly vulnerable to protests, the openness to protests may serve an important safety-valve function. The return-based tax is also susceptible to widespread small-scale cheating, by failing to report income and by overstating deductions. Again, although there are obvious arguments that this vulnerability to cheating is bad thing, there is also something to be said in its favor. From one perspective, it may create a sense that one is trusted by the government (within limits), which may foster a corresponding sense of trust in government. From another perspective, it gives the average person a sense of (again, limited) empowerment to resist Leviathan.

This chapter reviews various policy approaches to the taxation of international income and the deductibility of financing costs. It begins by considering tax policy objectives that a government may adopt and how this affects the international allocation of capital. This is followed by an analysis of outbound and inbound investment issues and the tax treatment of interest. It examines whether a country should fully tax foreign source profits on an accrual basis or exempt it with limitations on interest deductibility. A final section considers issues related to international cooperation in taxation, including the allocation of a harmonized tax base.

This chapter contests the claim made by Murphy and Nagel that the choice of tax base is of only instrumental significance to economic justice. The authors agree that what ultimately justifies taxation is its contribution to just outcomes. However, they argue that the likely presence in a just constitution of a principle of political equality and/or fair equality of opportunity, in conjunction with the need to maintain the constitution as just, means the choice of tax base is not purely instrumental and indeed supports arguments in favour of wealth as an object of taxation. The use of mass-revenue-raising taxation to provide social services is a further important mechanism for dealing with the threat that inequality poses to justice. There are, therefore, reasons of principle for favouring a mass-revenue-raising tax that also taxes wealth, which as a practical matter, means taxing income.

Sweden's diverse set of social insurance programs provides a high safety net for its citizens but requires a high rate of taxation. Social insurance programs create their own disincentives for market work. Historically, Sweden's programs have been robust to individual malfeasance, yet there is an emerging evidence that malfeasance is on the rise. This chapter explores studies on labor supply from crisis through recovery. The welfare state creates strong incentives to be in the labor force by making many benefits conditional on labor force participation, but it also creates strong incentives not to work many hours, which helps explain why Swedes work relatively few hours. Much of the labor supply adjustment in Sweden, however, takes place in dimensions other than contracted hours of work. The reform increased the long-term viability of the pension system and improved incentives to save and work. Here, Sweden is ahead of the United States—where the private pension system has been in crisis and where there is no national consensus on how to deal with social security—and the United Kingdom, where pension system reforms created a funding crisis. Sweden will need to increase self-insurance of small (short-term) risks and may need to increase the monitoring of benefits to limit the free riding that stems from the apparent shift in norms away from market work.

This chapter focuses on the essential theoretical foundations of taxation and some key basic concepts such as the tax base and rate structure. It discusses the three types of tax bases in considering comprehensive individual-level tax: wages, spending, and income. As income tax is the focus of this text, this chapter also explains the two elements that make up income—consumption and savings—and how this makes income a “double tax”. Furthermore, the chapter analyzes features that are rarely questioned, that makes tax into a virtual wage tax, where taxation on capital is voluntary and gives own advice in tax planning.

This chapter assesses the rightful claims of developed and developing countries to portions of the “international tax base.” Existing revenue in developed country coffers and incremental revenue from possible reform of the international tax system are not substitutes. There is a massive difference between developed countries redirecting a portion of existing revenue toward the redress of human rights shortfalls in developing countries on the one hand, and a restructuring of the basic understanding of international tax entitlements such that developing countries have a superior claim to revenues as their own in the first instance on the other. The chapter then proposes three possible ways in which we might rethink tax policy: a recasting of the basic source-residence dichotomy that deeply pervades the existing approach to international taxation; a consideration of tax policy with an eye to duties that nations may hold with respect to one another; and a rethinking of the role of corporate incidence analysis in tax policy.