U.S. Taxation of International Mergers, Acquisitions, and Joint Ventures.

• Author: Tann, Jr., Joseph S.

If you want to shrink something, you must first allow it to expand.

Lao-Tzu (Tao Te Ching: Book of the Way and of How It Manifests Itself in the World)

I.

Lao-Tzu's observation offers a unique insight into the phenomenon occurring today when things appear to be expanding in search of a new, perhaps less expansive, certainly less chaotic, state. We are transitioning into a New Era. At the forefront of this transition is the Communication Revolution. We are in the midst of a Revolution unparalleled in social, cultural, and economic magnitude. In my view, the Communications Revolution will find itself at the top of the Richter scale in social cultural, and economic significance, far exceeding the Industrial Revolution. A similar, but somewhat less Richterial, phenomenon occurred in the mid-15th Century when Gutenberg's printing press ushered in the Era of the Common Man. As observed by Federal Communications Commissioner Susan Ness earlier this year: "The communications revolution is a global phenomenon."

On a social plane, the Communications Revolution already dwarfs the Age of Enlightenment and Reason in its facilitation of the exchange and analysis of ideas. While the resulting social cleavage may be unsettling initially, it is productive in the long-run because the World Stage on which the communication of ideas and its accompanying discourse occurs is pregnant with opportunity for social progress. Clearly, the rapid growth and deployment of the technology that permits -- no, fosters -- communication across social boundaries are chiefly responsible for the exponentially increasing demand for broader arrays of information packaged to permit ready access and immediate use. As information becomes the oil of the 21st Century, information democracy is poised to become the clarion call of the self-respecting, politically correct, storm-trooping intelligentsia of the new millennium.

Culturally, the Revolution has taken on Joshuaian dimensions: walls of ignorance have been reduced to rubble. As the Revolution progresses, the world will become a Global Village with a new culture challenging the very existence of nation states. In this connection, consider the following observations:

* "The communications revolution is bringing European soap operas into mud-brick Arab shanties, even as Arab upper classes travel back and forth to the West and communicate on the Internet. All this, coupled with fast-forward urbanization and population growth, means Arab cultures are dramatically evolving: the Arab middle classes are more westernized, the Arab power more restive."

* "Europe will be a part of the global village. But instantaneous access to the rest of the world doesn't guarantee success..."; "the U.S. is setting the pace in almost every aspect of the communications revolution...."

* "[B]ecause the United States is a hub of the communications network, other cultures have been forced to at least partly Americanize themselves in order to succeed."

I share Economist Paul Romer's belief that the world is now poised on the edge of an unprecedented burst of innovation and wealth-creation as people break free of traditional economic thinking and industrial-age limitations.

The Global Village highlights yet another development driven by the Communications Revolution: the globalization phenomena. The rapid growth and deployment of communications technology has enabled money, goods, services, information, and people to cross...