Brave new ideas on redistributing wealth
The issue of international taxation is a crucial consideration in redistributing global wealth, but not enough research has been undertaken with respect to this complex topic. The EU-funded INTLTAXFAIRNESS (The use of international tax arrangements to promote global wealth redistribution) project aimed to address this shortfall in research. It based its work on the premise that more efficient use of international taxation is not only possible, but could also redistribute resources among nations more equitably. In total, five key research papers on this pivotal topic emerged from the project. The first two papers, which could support legal scholars, economists and academics in advancing this premise, focused on the concept as a whole and on normative issues. The publications show how the question of redistributions has not been adequately explored and propose a framework for analysing the potential distributive impact of international tax arrangements. They also argue that in many cases wealth redistribution can be more effective than other balancing mechanisms such as international labour regulations, environmental laws and fair trade. Beyond the two general papers, the project team produced three technical publications on taxation of multinational companies aimed at tax academics in public finance, accounting and law. Policymakers were also targeted, especially those interested in reforming their international tax system in line with global trends. One technical paper focuses on the taxation of related party interest payment, proposing an efficient and cost-effective method for allocating multinational enterprises' financial income. The second and third papers address how tax authorities should determine the location of income streams divided from intangible assets within a multinational group. The two papers propose alternatives to transfer prices and suggest that the income earned from certain types of intangibles be allocated via a cost-of-labour formula. All five research papers could undoubtedly offer valuable insight not only to academia but also to the policymaking process. If the redistribution of wealth is taken more seriously, particularly with respect to international taxation, it could potentially alleviate poverty in times of financial crisis.
Keywords
Taxation, international tax, wealth redistribution, multinational companies, intangible assets
