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. authors. Ruth Mason is Professor of Law and Nancy & Bill Trachsel Corporate Law Scholar, University of Connecticut School of Law. Michael S. Knoll is the Theodore K. Warner Professor, University of Pennsylvania Law School; Professor of Real Estate, Wharton School; Co-Director, Center for Tax Law and Policy, University of Pennsylvania. Copyright 2012 by Ruth Mason and Michael Knoll. All rights reserved. The authors would like to thank Reuven Avi-Yonah, Yariv Brauner, Kim Brooks, Karen Brown, Albert Choi, Graeme Cooper, Steven Dean, Mihir Desai, William Eskridge, Mary Louise Fellows, Michael Graetz, James Hines, Mitchell Kane, Lily Kahng, Michael Lang, Sarah Lawsky, Pasquale Pistone, Diane Ring, Alexander Rust, Wolfgang Schon, Daniel Shaviro, Kirk Stark, Alvin Warren, Ethan Yale, George Yin, tax workshop participants at McGill Faculty of Law, University of Michigan Law School, National Tax Association, NYU School of Law, Seattle University School of Law, Vienna University of Economics and Business, and faculty workshop participants at Brooklyn Law School, Columbia Law School, Georgetown Law Center, University of New South Wales Australian School of Business, University of Pennsylvania Law School, University of Virginia School of Law, and Yale Law School. We owe special thanks to Mike Aikins, Al Dong, Benjamin Meltzer, and Jarrod Shobe for research assistance. what is tax discrimination? 1015 article contents
Publication Year: 2012
Publication Date: 2012-03-01
Language: en
Type: article
Access and Citation
Cited By Count: 21
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