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- Title
What Is Tax Discrimination?
- Authors
Mason, Ruth; Knoll, Michael S.
- 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.
- Subjects
EUROPEAN Union countries; UNITED States; TAX laws; DISCRIMINATION (Sociology); NONDISCRIMINATION principle (International law); COMPETITIVE advantage in business
- Publication
Yale Law Journal, 2012, Vol 121, Issue 5, p1014
- ISSN
0044-0094
- Publication type
Article