AuthorBrauner, Yariv

The desirability of cooperation among nations in coordination of their tax rules and policies has occupied the minds of many tax scholars, supporting positions from close cooperation formalized in a world tax organization to tax competition with only minimal coordination of the "rules of the game," relying on market theories. (1) This theoretical discourse appears to have contributed, however, very little to the evolution of the international tax regime, which has struggled with the same questions since its launch, almost a century ago, to no avail, risking deterioration and even destruction. The disagreement among nations about the optimal extent of cooperation in tax matters is not unexpected when more cooperation is viewed as a surrender of sovereignty--sovereignty that seems to be under increasing threat on many levels--beyond tax, and when less cooperation threatens to result in a loss for all nations, especially the least powerful. (2) Against this background of increasingly divergent positions, Tsilly Dagan's new book, International Tax Policy: Between Competition and Cooperation? is a breath of fresh air, purposefully breaking with the binary approach to the question at hand and attempting to reconcile the various views with a concrete direction for the international tax regime to take if it is to survive and preserve the significant benefits it provides the world.

Published on the heels of the Base Erosion and Profit Shifting (BEPS) project, Dagan's book is both important and timely after the global financial crisis included some of the most extensive collaborations on tax policies ever. (4) Dagan has been over the years the most sober voice in favor of tax competition, yet in this book, although not giving up on her defense of the merits of competition, she methodically explains the benefits and disadvantages of all approaches to international tax policy, admitting that no pure approach could be seriously helpful in the guidance of policymaking. Dagan's methodology, like her earlier writing, is dominated by market theory and game theoretical exercises, however with unique sensitivity to the importance of fairness and legitimacy for the betterment of all in society.

Dagan's book is divided into three main parts. First, it presents the various choices that nations face in the making of policies, emphasizing the constraints on policymaking that the open, and constantly globalizing economy imposes on such nations. (5) One of the key contributions of the book is the observation about what Dagan calls the "marketization" of taxation, (6) where countries operate as players in the competition for investment and revenue, and as participants in the competition game rather than rule makers for the private market competitors as they used to be in the closed economies framework. In such a world, decisions that used to be domestic in nature, made by the sovereign subject to the single authority of democracy or whatever political regime applicable, are now constrained by international standards and the interdependence of most economies.

The second part of the book, perhaps its key contribution, pulls apart the quite dominant notion that international cooperation in tax matters is both feasible and desirable. (7) Dagan's analysis particularly targets bilateral tax treaties, the building blocks of the international tax regime, arguing that their importance and contribution to the general welfare is questionable. Most importantly, Dagan demonstrates that tax treaties are not necessary to achieve the most important goal of international taxation: the elimination of double taxation. Consequently, tax treaties must serve a different purpose. According to Dagan, that purpose is the solidification of the power of the richest nations and the Organisation for Economic Co-operation and Development (OECD), the rich countries club. She is particularly concerned about the cartelization effects of the universality of tax treaties fashioned after the OECD Model convention. The critique of cooperation goes beyond tax treaties, however, and extends to the theory...

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