Document Type
Article
Publication Date
1-1-2012
Abstract
Prohibitions of tax discrimination have long appeared in constitutions, tax treaties, trade treaties, and other sources, but despite their ubiquity, little agreement exists as to how such provisions should be interpreted. Some commentators have concluded that tax discrimination is an incoherent concept. In this Article, we argue that in common markets, like the EU and the United States, the best interpretation of the nondiscrimination principle is that it requires what we call “competitive neutrality,” which prevents states from putting residents at a tax-induced competitive advantage or disadvantage relative to nonresidents in securing jobs. We show that, contrary to the prevailing view, maintaining a level playing field between resident and nonresident taxpayers requires neither tax rate harmonization nor equal taxation of residents and nonresidents. Our approach produces simple rules of thumb that provide states and courts with clear direction in writing tax laws and evaluating challenges to those laws.
Keywords
tax discrimination, capital export neutrality, capital import neutrality, capital ownership neutrality, European Court of Justice, Schumacker, Gerritse, de Groot, competitive neutrality
Publication Title
Yale Law Journal
Repository Citation
Mason, Ruth and Knoll, Michael S., "What Is Tax Discrimination?" (2012). All Faculty Scholarship. 404.
https://scholarship.law.upenn.edu/faculty_scholarship/404
Included in
International Economics Commons, International Trade Law Commons, Political Economy Commons, Taxation Commons, Taxation-Transnational Commons
Publication Citation
121 Yale L.J. 1014 (2012).