No widespread denominator within the worldwide tax discourse

“width =” 800 “height =” 480 “/> There seems to be no solution in sight to the much discussed problem of tax avoidance by international companies. As the results of the basic research show, it is deeply rooted in various legal traditions. Credit: Alex Motoc / unsplash

Large companies that sell their products and services around the world but do not pay income taxes on revenues generated in countries other than their own are the reason many are calling for new tax rules. For the legal expert Daniel Blum, the unproductive back and forth of arguments is rooted in different schools of thought that have no common denominator. – This finding is the result of several years of research.

GAFA, the acronym for the four world leaders – Google, Amazon, Facebook, Apple – has been the source of discussions on international tax issues for years. Many people use at least one of the digital services and products from the four major US companies. Although many of the big four customers who make good profits for them are Europeans, GAFA pays little or no income tax to countries outside the US. For this reason, attempts have been made for years to reform the historical tax regulations. Taxation is usually tied to a physical establishment in the respective market country, but that’s not the point.

With funds from the Austrian Science Fund FWF, Daniel Blum, long-time research associate at the Institute for Austrian and International Tax Law at the Vienna University of Economics and Business, analyzed hundreds of pages of the ongoing academic, political and legislative discourse and found that the protagonists have been speaking for different purposes for many years: “There are two basic schools of thought: natural law and legal positivism. When everyone argues or makes demands from their own point of view, there is simply no common denominator.”

Exchange of arguments without common ground

Does that mean that brilliant thinkers from reputable international institutions have been talking blue in the face for years, but not getting along from the start? That’s a pretty strong statement, and Daniel Blum looks forward to any vigorous objections or attempts to refute his research as soon as they are published next year. He himself discovered the “research gap” during a research stay in the USA at the University of Georgia and the University of Florida School of Law as well as the NYU School of Law. In his opinion, the views on the international taxation of modern digital companies on both sides of the Atlantic “have to do with the fact that they are somehow shaped by their respective legal understandings”. And that imprint goes back further than the invention of the internet. This concerns fundamental questions: What do we think is being done right in international tax law? And why should we comply with these legal norms?

The natural law “school of thought” derived the legitimacy of the law first from God and then, since the Enlightenment, from reason (in the sense of: law must be justified). The right-wing positivist “school of thought”, on the other hand, regards the cornerstone as the creation of artificial legal norms, which a legitimate democratic-political process can achieve. Although there are international law provisions and 3,000 bilateral tax treaties, there is no common international understanding of the normativity in tax law. Blum is convinced that answering his questions of legal theory would have tangible effects in practice. “Because we are at a dead end as it is now.”

Case Study: GAFA Should Pay

Daniel Blum illustrates this with a concrete debate that has been going on since 2012 between experts from the EU Commission, the OECD, the WTO, political representatives, but also the community of scientists from the fields of law, economics and ethics. The example of “taxation of internationally active digital companies” illustrates the underlying problem. When analyzing the typical arguments such as fairness from the perspective of the two schools of thought and comparing them with the relevant international law standards, Blum found “that this discourse misses the point because the arguments are approached from very different starting points”. For his diploma thesis, Blum did not limit himself to marking the different boxes of the schools of thought, but tried to make the typical arguments of each school understandable for the other school by working out the underlying assumptions and reasons. After all, one side or the other is not correct. It is the point of view that influences the argument.

Human right or moral basis

Indeed, tax law is seen as an area of ​​law that is technical and very written down, and morality should play a subordinate role in this. But after asking a great many “why” questions, Blum hit the crux of the problem, namely the two different positions regarding the use of natural law or man-made law as a yardstick. “To my surprise, the main result of my basic research is that natural law thinking shapes the discourse much more than I had thought.” When Blum underpinned the central arguments of the discussion with the respective schools of thought, it fell “like a scales out of my sight why it often looked at international conferences as if one side wanted to deny the competence of the other”. International taxation is about a lot of money, which is why it is high on the agenda of G20 finance ministers. Daniel Blum, who is now working in tax consulting, does not want to get involved in the argument about theories, but rather “build bridges than deepen trenches”.

Canada Follows France’s Leadership in Taxing Digital Giants Provided by the Austrian Science Fund (FWF)

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