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Two Accounts of International Tax Justice

Published online by Cambridge University Press:  08 June 2020

Ivan Ozai
Ivan Ozai*
Affiliation:
Ivan Ozai, Richard H. Tomlinson Fellow and doctoral candidate, Faculty of Law, McGill University. [email protected]
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The contemporary international tax regime has been increasingly criticized over the years from varied perspectives, particularly as to the unfairness it produces for developing countries. Some commentators argue it is unjust due to the lack of participation of developing countries in the policymaking process on an equal footing. Others suggest the international tax regime was designed by affluent countries to respond to self-interested goals. Some note that its current institutional design creates opportunities for tax competition and avoidance, which more seriously affect developing economies due to their relative dependence on corporate income tax and their greater vulnerability to capital mobility. Others specifically criticize how taxing rights, that is, the entitlement of countries to tax cross-border transactions, are currently allocated between home and host countries and how they disfavour capital-importing, developing countries.

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Research Article
Information
Canadian Journal of Law & Jurisprudence , Volume 33 , Issue 2 , August 2020 , pp. 317 - 339
Copyright
© The Author(s) 2020

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Footnotes

For helpful comments on previous drafts, special thanks go to Laurens van Apeldoorn, Alice Chessé, Allison Christians, Peter Dietsch, Frédéric Mérand, and Catherine Walsh. This article comprises work that forms part of the author’s research at McGill University. The author gratefully acknowledges financial support from the Fonds de recherche du Québec sur la société et culture (FRQSC), the Centre for International Governance Innovation (CIGI), the Centre d’études et de recherches internationales de l’Université de Montréal (CÉRIUM) and McGill University.

References

1. Keith Dowding, “Are Democratic and Just Institutions the Same?” in Keith Dowding, Robert E Goodin & Carole Pateman, eds, Justice and Democracy: Essays for Brian Barry (Cambridge University Press, 2004) 25.

2. The distinction addressed in this paper between justice and legitimacy is not to be confounded with the distinction between input (process) and output (outcome) legitimacy. Similar to an assessment based on justice, output legitimacy is concerned about outcomes of institutional processes. However, output legitimacy is still about legitimacy in the sense that it requires outcomes of institutional processes to be aligned with stakeholders’ interests. It is still a democratic question of how well institutions connect with interests. In other words, conditions for legitimacy focus either on including individuals’ inputs in the process (input legitimacy) or achieving results that realize those same interests (output legitimacy). On the other hand, distributive justice follows a different philosophical tradition and, despite also focusing on outcomes, speaks to how benefits and burdens can be fairly distributed throughout society. Whereas outcome legitimacy builds on the democratic tradition and speaks to the accountability of a given institution to stakeholders, distributive justice consists of a moral evaluation of a given distribution rather than on whether such a distribution aligns with stakeholders’ interests. For a more comprehensive discussion on the legitimacy-justice distinction, see Keith Dowding, Robert E Goodin & Carole Pateman, eds, Justice and Democracy: Essays for Brian Barry (Cambridge University Press, 2004).

3. See Keith Dowding, Robert E Goodin & Carole Pateman, “Between Justice and Democracy” in Keith Dowding, Robert E Goodin & Carole Pateman, eds, Justice and Democracy: Essays for Brian Barry (Cambridge University Press, 2004) 1 at 1 (noting that political philosophy has historically focused on one and then the other of these two themes and rarely succeeded in holding them jointly) and Simon Thompson, “On the Circularity of Democratic Justice” (2009) 35:9 Philosophy & Social Criticism 1079 at 1080 (pointing out that little attention has been given to the relationship between these two normative dimensions).

4. This paper leaves aside the fundamental question in democratic theory about who should be included in the collective decision-making process—commonly known as the boundary problem, the problem of inclusion, or the problem of constituting the demos—not only because it goes beyond the scope of this article, but also because most would agree that at least those who are subjected to the decision should take part in making it. For an overview, see Robert E Goodin, “Enfranchising All Affected Interests, and Its Alternatives” (2007) 35:1 Philosophy & Public Affairs 40.

5. A deeper discussion on these two forms of legitimacy deficit is provided in Ivan Ozai, “Institutional and Structural Legitimacy Deficits in the International Tax Regime” (2020) 12:1 World Tax J.

6. In 2013, the OECD started the Base Erosion and Profit Shifting (BEPS) project, a comprehensive action plan to address tax avoidance and tax competition, and, in 2016, the OECD introduced the Inclusive Framework on BEPS, which allows the participation of non-OECD jurisdictions in the decision-making processes related to the BEPS project. See OECD, OECD/G20 Inclusive Framework on BEPS: Progress Report July 2017-June 2018 (OECD, 2018) at 6. Although the Inclusive Framework aimed to address legitimacy concerns, it has been criticized by many commentators for its limited scope. See Allison Christians & Laurens van Apeldoorn, “The OECD Inclusive Framework” (2018) 72:4/5 Bull Intl Tax 226 at 233 (noting the risks of the Inclusive Framework being dismissed as mere rhetoric in the absence of greater transparency as to what goals the OECD aims to achieve with its initiative).

7. See Sissie Fung, “The Questionable Legitimacy of the OECD/G20 BEPS Project” (2017) 10:2 Erasmus L Rev 76 at 84 (concluding that “only at the implementation stage of the BEPS Package are all countries treated as ‘horizontal equals’ in order to ensure its proper execution”); Dirk Maarten Broekhuijsen, A Multilateral Tax Treaty: Designing an Instrument to Modernise International Tax Law (PhD Dissertation, Leiden University, 2017) at 59-60 (arguing that participation of non-OECD countries have been mostly limited to the endorsement phase); Eurodad, Q & A on the Intergovernmental Tax Body (Brussels: Eurodad, 2016) (arguing that, at best, the Inclusive Framework provides a restricted influence of developing countries on a predetermined and very limited agenda).

8. Some suggest that a global tax body with universal membership could be achieved by upgrading the existing UN Committee of Experts on International Cooperation in Tax Matters (UN Tax Committee). See, e.g., Reuven S Avi-Yonah & Haiyan Xu, “Evaluating BEPS” (2017) 10:1 Erasmus L Rev 3 at 9 (“OECD and/or G20 is not the truly global platform for comprehensive reform of international tax law. To transform the current BEPS project into truly global, coherent, coordinated and inclusive actions, UN should undertake the leadership in the next stage of international tax law reform.”); Annet Wanyana Oguttu, “Resolving Treaty Disputes: The Challenges of Mutual Agreement Procedures with a Special Focus on Issues for Developing Countries in Africa” (2016) 70:12 Bull Intl Tax 724 at 741; “Statement on Behalf of the Group of 77 and China by Carola Íñiguez, Undersecretary of International Organizations of Ecuador, at the ECOSOC Special Meeting on International Cooperation in Tax Matters” (New York, 7 April 2017), online: http://www.g77.org/statement/getstatement.php?id=170407b [perma.cc/6H3Z-B2GW]; Eurodad, supra note 7; Oxfam, “Business Among Friends: Why Corporate Tax Dodgers are not yet Losing Sleep over Global Tax Reform” (2014) 185 Oxfam Briefing Paper at 15 (arguing for linking the BEPS project to the UN Tax Committee to improve inclusiveness of non-OECD countries).

9. See JC Sharman, “Seeing Like the OECD on Tax” (2012) 17:1 New Political Economy 17 and Tarcísio Diniz Magalhães, “What Is Really Wrong with Global Tax Governance and How to Properly Fix It” (2018) 10:4 World Tax J 499 at 514.

10. Paddy Carter, “Row Over UN Tax Body Is a Needless Distraction for Developing Nations,” The Conversation (21 July 2015), online: https://theconversation.com/row-over-un-tax-body-is-a-needless-distraction-for-developing-nations-44943 [perma.cc/Y6EV-ESYU]. But see H David Rosenbloom, Noam Noked & Mohamed Helal, “The Unruly World of Tax: A Proposal for an International Tax Cooperation Forum” (2014) 15:2 Fla Tax Rev 57 at 75-76 (arguing that membership of regional organizations is generally based on geography and members might not have shared interests in tax policy).

11. See, e.g., Eduardo A Baistrocchi, “The Use and Interpretation of Tax Treaties in the Emerging World: Theory and Implications” (2008) 4 British Tax Rev 352 at 372-73.

12. Ibid (pointing out that the Andean model became virtually irrelevant in international taxation); Martin Hearson, “Developing Countries’ Role in International Tax Cooperation” (2017) Intergovernmental Group of Twenty-Four Working Paper, online (pdf): G24 https://www.g24.org/wp-content/uploads/2017/07/Developing-Countries-Role-in-International-Tax-Cooperation.pdf [perma.cc/XZF8-GMEN].

13. This phenomenon is commonly called path dependence, which refers to the causal relevance of preceding stages in a temporal chain of events. It suggests that once institutions have started down a track, the costs of reversal become significantly high due to the entrenchments of certain institutional arrangements. See Paul Pierson, “Increasing Returns, Path Dependence, and the Study of Politics” (2000) 94:2 American Political Science Rev 251 at 252. See also Sunita Jogarajan, Double Taxation and the League of Nations (Cambridge University Press, 2018) at 254-56 (providing a historical analysis of the League of Nations’ work in the 1920s which led to the current international tax regime and suggesting that reform discussions are often guided by a desire to maintain the status quo).

14. See Tsilly Dagan, International Tax Policy: Between Competition and Cooperation (Cambridge University Press, 2018) at 173-74 (“In other words, in designing the treaty mechanism to favor countries of residence in the allocation of tax revenues, the network initiators were able to extract monopolistic rents at the expense of late-coming developing (host) countries.”). See also Ranjit Lall, “Timing as a Source of Regulatory Influence: A Technical Elite Network Analysis of Global Finance” (2015) 9 Regulation & Governance 125 (pointing out the importance of first-mover position in setting the agenda in global rulemaking, especially in influencing distributional outcomes by ensuring that proposals made by first movers are increasingly difficult to change at later stages of rulemaking).

15. Irene Burgers & Irma Mosquera, “Corporate Taxation and BEPS: A Fair Slice for Developing Countries?” (2017) 1 Erasmus L Rev 29 at 38.

16. Victor Thuronyi, “Tax Treaties and Developing Countries” in Michael Lang et al, eds, Tax Treaties: Building Bridges Between Law and Economics (IBFD, 2010) 441 at 442-43.

17. Ariane Pickering, “Why Negotiate Tax Treaties?” in UN, Papers on Selected Topics in Negotiation of Tax Treaties for Developing Countries (United Nations, 2014) 1 at 26.

18. Ibid at 23-25.

19. Lukas Hakelberg, “Coercion in International Tax Cooperation: Identifying the Prerequisites for Sanction Threats by a Great Power” (2016) 23:3 Rev Intl Political Economy 511.

20. Fung, supra note 7.

21. Mitchell B Weiss, “International Tax Competition: An Efficient or Inefficient Phenomenon?” (2001) 16 Akron Tax J 99; David C Elkins, “The Merits of Tax Competition in a Globalized Economy” (2016) 91 Indiana LJ 905. I thank an anonymous referee for raising this point.

22. See, e.g., Reuven S Avi-Yonah, “Globalization, Tax Competition, and the Fiscal Crisis of the Welfare State” (2000) 113:7 Harv L Rev 1573; Peter Dietsch, Catching Capital: The Ethics of Tax Competition (Oxford University Press, 2015); Laura Seelkopf & Hanna Lierse, “Taxation and Inequality: How Tax Competition Has Changed the Redistributive Capacity of Nation-States in the OECD” in Melike Wulfgramm, Tonia Bieber & Stephan Leibfried, eds, Welfare State Transformations and Inequality in OECD Countries (Palgrave Macmillan, 2016) 89 at 96-97. For a normative analysis, see also Ivan Ozai, “Tax Competition and the Ethics of Burden Sharing” (2018) 42 Fordham Intl LJ 61.

23. Thomas Rixen, “Tax Competition and Inequality: The Case for Global Tax Governance” (2011) 17:4 Global Governance 447.

24. Hans-Werner Sinn, The New Systems Competition (Blackwell, 2003) at 56.

25. Seelkopf & Lierse, supra note 22 at 92-93.

26. Anthony C Infanti, “Tax Equity” (2008) 55 Buff L Rev 1191 at 2000.

27. Seelkopf & Lierse, supra note 22 at 92-93.

28. See, e.g., S Bucovetsky, “Asymmetric Tax Competition” (1991) 30:2 J Urban Economics 167 and John D Wilson, “Theories of Tax Competition” (1999) 52:2 Nat’l Tax J 269.

29. See Richard M Bird & Eric M Zolt, “Redistribution via Taxation: The Limited Role of the Personal Income Tax in Developing Countries” (2005) 52 UCLA Law Rev 1627 at 1656.

30. See Michael Carnahan, “Taxation Challenges in Developing Countries” (2015) 2:1 Asia Pacific Pol’y Stud 169 at 176.

31. See International Monetary Fund, “Spillovers in International Corporate Taxation” (2014) IMF Policy Paper at 7.

32. OECD, Promoting Transparency and Exchange of Information for Tax Purposes: A Background Information Brief (9 January 2010), online (pdf): http://www.oecd.org/newsroom/44431965.pdf [perma.cc/968E-XY93].

33. Clemens Fuest & Nadine Riedel, “Tax Evasion, Tax Avoidance and Tax Expenditures in Developing Countries: A Review of the Literature” (2009) Report Prepared for the UK Department for International Development, online (pdf): http://r4d.dfid.gov.uk/.

34. Michael Keen & Alejandro Simone, “Is Tax Competition Harming Developing Countries More Than Developed?” (2004) 34 Tax Notes Intl 1317.

35. Carnahan, supra note 30 at 177.

36. See, e.g., Kim Brooks & Richard Krever, “The Troubling Role of Tax Treaties” in Geerten MM Michielse & Victor Thuronyi, Tax Design Issues Worldwide (Kluwer Law International: Alphen aan den Rijn, 2015) 159 at 166.

37. The description of tax treaties as a “poisoned chalice” for developing countries has been first suggested by Martin Hearson in a presentation at Strathmore University Business School in Nairobi in September 2013. See Martin Hearson, “Double Tax Treaties: A Poisoned Chalice for Developing Countries?” (12 September 2013), online: https://martinhearson.net/2013/09/12/double-tax-treaties-a-poisoned-chalice-for-developing-countries/ [perma.cc/7EMS-5498].

38. Brooks & Krever, supra note 36. But see Eric M Zolt, “Tax Treaties and Developing Countries” (2018) Oxford University Centre for Business Taxation Working Paper 18/05 (arguing that developing countries might have a reason to enter into treaties if they are able to secure meaningful withholding rates and safeguards against treaty abuse and suggesting an alternative view where tax revenues are not transferred from developing to developed countries but picked up by foreign investors in form of tax incentives).

39. See Dagan, supra note 14.

40. For a description of path dependence in international tax governance, see Section 2.

41. This is one the most discussed topics in the recent political philosophy literature. For a brief summary, see Samuel Scheffler, “The Idea of Global Justice: A Progress Report” (2014) 20 Harv Rev Philosophy 17. For a more comprehensive account, see Gillian Brock, ed, Cosmopolitanism versus Non-Cosmopolitanism: Critiques, Defenses, Reconceptualizations (Oxford University Press, 2013).

42. I thank an anonymous referee for pushing me to say more on this point.

43. I borrow this term from Andrea Sangiovanni, “Global Justice, Reciprocity, and the State” (2007) 35:1 Philosophy & Public Affairs 3, which refers broadly to the works of early, global egalitarians such as Charles Beitz, Political Theory and International Relations (Princeton University Press, 1973) and Thomas W Pogge, Realizing Rawls (Cornell University Press, 1989).

44. These duties are sometimes called relational duties. See Andrea Sangiovanni, “On the Relation Between Moral and Distributive Equality” in Gillian Brock, ed, Cosmopolitanism versus Non-Cosmopolitanism: Critiques, Defenses, Reconceptualizations (Oxford University Press, 2013) 55.

45. Darrel Moellendorf, “Cosmopolitanism and Compatriot Duties” (2011) 94:4 Monist 535. See also Darrel Moellendorf, “Human Dignity, Associative Duties, and Egalitarian Global Justice” in Gillian Brock, ed, Cosmopolitanism versus Non-Cosmopolitanism: Critiques, Defenses, Reconceptualizations (Oxford University Press, 2013) 222.

46. Joshua Cohen & Charles Sabel, “Extra Rempublicam Nulla Justitia?” (2006) 34:2 Philosophy & Public Affairs 147 at 165.

47. This view is sometimes called “explanatory pluralism” and rejects that global poverty can be wholly explained as either a product of domestic factors (explanatory nationalism) or a result of global factors (explanatory globalism). See Chris Armstrong, “Defending the Duty of Assistance?” (2009) 35:3 Social Theory & Practice 461 at 468-69.

48. Building on luck egalitarianism, Cappelen argues for what he calls a principle of equalization at the international level, according to which the opportunities different countries have to pursue their goals be equalized, so that differences stemming from global factors be eliminated. See Alexander Cappelen, “Responsibility and International Distributive Justice” in Andreas Follesdal & Thomas Pogge, eds, Real World Justice: Grounds, Principles, Human Rights, and Social Institutions (Springer, 2005) 215. See also Jon Mandle, Global Justice (Polity Press, 2006) at 102 (arguing that this duty of justice is stronger among wealthy states and those that played a historical role in making the social order unjust such as through colonialism).

49. This is shown, e.g., in Max Roser & Esteban Ortiz-Ospina, “Global Extreme Poverty” (2019), online: www.ourworldindata.org/extreme-poverty.

50. I thank an anonymous referee for making this point and pushing me to discuss this further.

51. See Roser & Ortiz-Ospina, supra note 49.

52. Ibid .

53. See Branko Milanovic, “Global Income Inequality by the Numbers: in History and Now—An Overview” (2012) The World Bank Policy Research Working Paper 6529, online: The World Bank http://documents.worldbank.org/ [perma.cc/S48Z-RCNK].

54. Even a less generous account of global justice, such as the one espoused in Rawls’s Law of Peoples, will concede that international institutions should be set in a way that is non-exploitative, so that wealthier economies would not benefit from unjustified distributive effects between nations. The current inequitable allocation of taxing rights between developing and developed countries, to the extent that it results in a distribution that significantly favours the latter at the expense of the former, likely violates what Rawls would consider as a “duty of non-exploitation”.

55. Dowding, Goodin & Pateman, supra note 3 at 5.

56. For a different position, see Richard J Arneson, “Democracy Is Not Intrinsically Just” in Keith Dowding, Robert E Goodin & Carole Pateman, eds, Justice and Democracy: Essays for Brian Barry (Cambridge University Press, 2004) 40 (arguing that the value of democracy is dependent on its ability to produce justice according to an independent standard of assessment and that the choice between autocracy and democracy should be determined based on which delivers morally superior results).

57. As Nancy Fraser points out, adopting a “mindset of latter-day philosopher kings” implies ignoring the political aspect of justice and the plurality of reasonable perspectives on how best to interpret the requirements of justice. See Nancy Fraser, “Social Justice in the Age of Identity Politics: Redistribution, Recognition, and Participation” in Nancy Fraser & Axel Honneth, Redistribution or Recognition?: A Political-Philosophical Exchange (Verso, 2003) 7 at 71. For a similar position in international tax policy, see Magalhães, supra note 9.

58. See Allen Buchanan & Robert O Keohane, “The Legitimacy of Global Governance Institutions” (2006) 20:4 Ethics & Intl Affairs 405 at 410, n 10 (arguing that legitimacy provides a “focal point” that helps stakeholders select one equilibrium solution among others).

59. The original list and subsequent adjustments are available at: https://ec.europa.eu/taxation_customs/tax-common-eu-list_en [perma.cc/5SZN-3GTU].

60. EC, Council Conclusions on the criteria for and process leading to the establishment of the EU list of non-cooperative jurisdictions for tax purposes, [2016] OJ, C 461/02.

61. Ibid .

62. EC, Council Conclusions on the EU list of non-cooperative jurisdictions for tax purposes, [2017] OJ, C 438/04.

63. The list has sparked criticism for lack of both transparency and objective criteria as it omits EU member states as well as some countries that are commonly viewed as tax havens. See, e.g., Daniel Boffey, “EU Blacklist Names 17 Tax Havens and Puts Caymans and Jersey on Notice”, The Guardian (5 December 2017), online: www.theguardian.com [perma.cc/3ZZL-ACKY] and Francesco Guarascio, “EU Adopts Tax Haven Blacklist, British Territories Spared”, Reuters (5 December 2017), online: www.reuters.com/article/us-eu-ecofin-tax/eu-adopts-tax-haven-blacklist-british-territories-spared-idUSKBN1DZ172 [perma.cc/T6TC-GDGB]. See also Allison Christians, “Sovereignty, Taxation and Social Contract” (2009) 18:1 Minnesota J Intl Law 99 at 101 (observing that the naming and shaming in harmful tax competition is problematic and represents the decision of taxing rights of sovereign nations by a relatively small and elite group of individuals). For general criticism of the practice of blacklisting, particularly by supranational institutions, see Lucas de Lima Carvalho, “The Ills of Blacklisting for International Taxation” (20 September 2018), online: Kluwer International Tax Blog http://kluwertaxblog.com/2018/09/20/ills-blacklisting-international-taxation [perma.cc/P3KD-PSRD].

64. Thompson, supra note 3.

65. See, e.g., Heikki Patomäki, “Global Justice: A Democratic Perspective” (2006) 3:2 Globalizations 99. A similar argument is advanced in the international tax literature in Magalhães, supra note 9 (“Philosophers, like the ones discussed below behave as experts when they put disagreement and political deliberation aside and perform the monological role of enlightened philosopher kings, offering her [or, more usually, his] own view of what justice consists in, what rights we have, what fair terms of social co-operation would be, and what all of this is based on.”).

66. OECD, OECD/G20 Inclusive Framework on BEPS: Progress Report July 2017-June 2018 (OECD, 2018) at 6. Along with the group of 46 countries (OECD and G20 members), 83 jurisdictions have joined the Inclusive Framework, amounting to a total of 129 participating jurisdictions. See OECD, Members of the Inclusive Framework on BEPS (Updated December 2019), online (pdf): https://www.oecd.org/ctp/beps/inclusive-framework-on-beps-composition.pdf [perma.cc/3ZMN-E8N3].

67. See OECD, Addressing Base Erosion and Profit Shifting (OECD, 2013).

68. See, e.g., Irma Johanna Mosquera Valderrama, “Legitimacy and the Making of International Tax Law: The Challenges of Multilateralism” (2015) 7:3 World Tax J 343 at 350.

69. This conception of democracy is sometimes known as the proceduralist perspective. For a firm defense of the proceduralist account of normative legitimacy, see Fabienne Peter, “Democratic Legitimacy and Proceduralist Social Epistemology” (2007) 6:3 Politics, Philosophy & Economics 329.

70. See, e.g., Richard J Arneson, “Defending the Purely Instrumental Account of Democratic Legitimacy” (2003) 11:1 J Political Philosophy 122 and Steven Wall, “Democracy and Equality” (2007) 57:228 Philosophical Q 416.

71. Ibid at 437.

72. Arneson, supra note 70 at 124. Arneson does point out that the instrumentalist approach takes various forms and argues for a specific version which holds that a political decision is legitimate only if over the long haul it produces morally superior results to ones that would result from any feasible alternative.

73. Eyal Benvenisti, The Law of Global Governance (The Hague Academy of International Law, 2014) at 208-09 (also noting that the term “global governance” in itself indicates that global regulators do not simply implement consensual commitments but rather “govern” through the exercise of discretion).

74. Participation in international governance itself is questioned as genuinely voluntary, considering the costs weaker states would suffer by not participating. See Buchanan & Keohane, supra note 58 at 414 (“Of course, there may be reasonable disagreements over what counts as substantial voluntariness, but the vulnerability of individual weak states is serious enough to undercut the view that the consent of democratic states is by itself sufficient for legitimacy”).

75. Tim Büttner & Matthias Thiemann, “Breaking Regime Stability? The Politicization of Expertise in the OECD/G20 Process on BEPS and the Potential Transformation of International Taxation” (2017) 7:1 Accounting, Economics & L.

76. Convention on the Organisation for Economic Co-operation and Development (14 December 1960) (entered into force 30 September 1961).

77. See OECD, “Frequently Asked Questions—Jobs”, online: OECD http://www.oecd.org/general/frequentlyaskedquestionsfaq.htm#JOBS [perma.cc/53VY-8QGS].

78. See, e.g., Büttner & Thiemann, supra note 75.

79. For a discussion on this assumption and a critique from a philosophical standpoint, see Laurens van Apeldoorn, “Exploitation, International Taxation, and Global Justice” (2019) 77:2 Rev Social Economy 163.

80. For a critical assessment, see Allison Christians, “Taxing According to Value Creation” (2018) 90 Tax Notes Intl 1379 (portraying economic substance and value creation as well-worn tax mantras and noting it camouflages the distributive nature of the international tax system as neutral and apolitical).

81. From the perspective of political legitimacy, the lack of distance between “author” and “subject” of international law is sometimes seen as problematic and resulting in states proceeding in a self-interested manner when crafting legal obligations for themselves. See Jaye Ellis, “Stateless Law: From Legitimacy to Validity” in Helge Dedek & Shauna Van Praagh, eds, Stateless Law: Evolving Boundaries of a Discipline (Ashgate, 2015) 133.

82. Buchanan & Keohane, supra note 58 at 414-15. See also Ellis, supra note 81 (arguing that access to the structures and processes of international law by civil society remains limited and concentrates on organizations rather than on individuals and informal groups).

83. Buchanan & Keohane, supra note 58 at 416.

84. Ibid .

85. See Fung, supra note 7 at 81 (pointing out that proposals to hand the BEPS Project over to the UN do not solve all the democratic deficits of international law-making and are most likely utopian); Magalhães, supra note 9 at 533 (noting the UN has repeatedly failed to act on behalf of poor countries); Robert O Keohane, “Global Governance and Legitimacy” (2011) 18:1 Rev Intl Political Economy 99 (pointing to the lack of transparency and accountability of the UN). See also Rafael Domingo, The New Global Law (Cambridge University Press, 2010) at 59 (arguing that the UN hands over the governance of the world to an exclusive club of sovereign powers and excludes an entire group of global actors who are dismissed as simple consultants).

86. For an interesting analysis of some of the perils of this type of constitutional choice, see Charles Delmotte, “Tax Uniformity as a Requirement of Justice” (2020) 33:1 Can JL & Jur 59.

87. For an overview of recent theories of institutional corruption, see Dennis F Thompson, “Theories of Institutional Corruption” (2018) 21 Ann Rev Political Science 495.

88. See Wolfgang Schön, “Taxation and Democracy” 72 Tax L Rev (forthcoming) (noting that while decision-making in tax matters is hardly constrained by any material constitutional limitations in the UK and the US, European and Latin American countries have largely resorted to hard-wired constitutional constraints on tax legislation to ensure a high degree of judicial review by constitutional courts).

89. Ibid (arguing that a content-oriented principle of tax equity should take charge of those who are not entitled to make tax policy dependent on their consent).

90. For the Revenue Problem, see, e.g., Reuven S Avi-Yonah, “Globalization, Tax Competition, and the Fiscal Crisis of the Welfare State” (2000) 113:7 Harv L Rev 1573; Nita Rudra, Globalization and the Race to the Bottom in Developing Countries: Who Really Gets Hurt? (Cambridge University Press, 2008); Dietsch, supra note 22. For the Allocation Problem, see, e.g., Thuronyi, supra note 16; Dagan, supra note 14; Martin Hearson, “When Do Developing Countries Negotiate Away Their Corporate Tax Base?” (2018) 30:2 J Intl Development 233.

91. Two notable exceptions are Dietsch, supra note 22 and Dagan, supra note 14.

92. The tax literature rarely discusses separate solutions for these two issues. Calls for improving legitimacy in the international tax regime frequently eclipse an in-depth discussion on solutions focused on distributive justice. See, e.g., Richard Collier & Nadine Riedel, “The OECD/G20 Base Erosion and Profit Shifting Initiative and Developing Countries” (2018) 72:12 Bull Intl Taxation 704; Richard M Bird, Reforming International Taxation: Is the Process the Real Product? (2015) 15-03 International Center for Public Policy Working Paper; Burgers & Mosquera, supra note 15; Avi-Yonah & Xu, supra note 8.

93. See Dowding, Goodin & Pateman, supra note 3 at 5 (noting that there is nothing inherent in democracy that necessarily makes it just).

94. Ibid at 5-6.

95. Thompson, supra note 3 (arguing that justice and legitimacy stand in a circular relationship, where democratic political arrangements constitute a requirement of justice, but democratic deliberations should meet the standards of justice).

96. Simon Caney, “Justice and the Basic Right to Justification” in Rainer Forst, ed, Justice, Democracy and the Right to Justification: Rainer Forst in Dialogue (Bloomsbury Academic, 2014) 147 at 152-56.

97. See Buchanan & Keohane, supra note 58 at 412 (arguing that there are two reasons not to mistake legitimacy for justice, the first being that there is sufficient disagreement on what justice entails so that a standard for legitimacy requires a different concept for securing coordinated support for valuable institutions, and the second that withholding support from institutions because they fail to meet the demands of justice would mean ignoring that progress toward justice requires effective institutions).

98. Robert E Goodin, “Democracy, Justice and Impartiality” in Keith Dowding, Robert E Goodin & Carole Pateman, eds, Justice and Democracy: Essays for Brian Barry (Cambridge University Press, 2004) 97 at 98. See also Lukas H Meyer & Pranay Sanklecha, “Legitimacy, Justice and Public International Law: Three Perspectives on the Debate” in Lukas H Meyer, ed, Legitimacy, Justice, and Public International Law (Cambridge University Press, 2009) 1 at 12.

99. See OECD, Harmful Tax Competition: An Emerging Global Issue (OECD Publications, 1998). For a comprehensive and critical analysis of the OECD’s harmful tax practices initiative, see Christians, supra note 63.

100. See OECD, supra note 99.

101. OECD, supra note 66 at 14 (pointing out that although “BEPS measures do not necessarily resolve the question of how rights to tax are shared between jurisdictions … the OECD/G20 Inclusive Framework will continue working towards a consensus-based long-term solution”).

102. Ibid at 28.

103. OECD, Addressing the Tax Challenges of the Digitalisation of the Economy (13 February 2019) Public Consultation Document.

104. Ibid at 5.

105. Similarly, a more recent document released by the OECD in May 2019 acknowledges that the international tax reform proposals currently discussed “will have an impact on revenues and the overall balance of taxing rights” and mentions the Inclusive Framework 43 times throughout its 40 pages. See OECD, Programme of Work to Develop a Consensus Solution to the Tax Challenges Arising from the Digitalisation of the Economy (OECD, 2019). However, the report gives no consideration to whether or how reform could address the existing inequities in the current allocation of taxing rights between developed and developing countries.

106. The Paris Agreement provided that a solution for climate change should “recogniz[e] the specific needs and special circumstances of developing country Parties” and that it should be implemented “to reflect equity and the principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.” See Paris Agreement (22 April 2016) TIAS 16-1104 (entered into force 4 November 2016). The agreed principle is now broadly known as the Common but Differentiated Responsibility and Respective Capabilities (“CBDR-RC”) principle and stands in contrast to the idea that the burden of climate justice should be shared equally by all societies regardless of background conditions. For discussions on the moral justifications of the CBRD-RC principle, see Simon Caney, “Climate Change and the Duties of the Advantaged” (2010) 13 Crit Rev Intl Soc Pol Phil 203; Henry Shue, “Global Environment and International Inequality” (1999) 75 Intl Aff 531, 534-35. See also Ivan Ozai, “Tax Competition and the Ethics of Burden Sharing” (2018) 42 Fordham Intl LJ 61 (applying some of the ethical principles developed in the literature on climate change to tax competition).

107. The UN’s 2030 Agenda for Sustainable Development (Res 71/1, A/70/L1), particularly its Goal 10 to “reduce inequality within and among countries,” is but one example.