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A Sceptic’s Guide to Justice in International Tax Policy

Published online by Cambridge University Press:  20 August 2019

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What, if any, are the moral norms governing the international taxation regime if the sceptic is right to think that considerations of distributive justice do not apply beyond the state? I sketch an answer to this question by examining Tsilly Dagan’s illuminating recent book International Tax Policy: Between Competition and Cooperation. In her work, Dagan identifies the position of Thomas Nagel, an influential global justice sceptic, as predominant among commentators in legal scholarship and policy debates on international taxation. According to Nagel, multilateral cooperation is appropriately conceived as a bargain between mutually self-interested states. In tracing the implications of his position for international tax policy Dagan argues that even a sceptic like Nagel is committed to identifying some considerations of distributive justice beyond the state to ameliorate the harmful effects of tax competition. In response I argue that Dagan is correct to claim that the global justice sceptic is committed to seeing cooperation in international tax policy as constrained by moral norms, but that these norms are what Nagel calls humanitarian duties rather than duties of justice. I establish that Dagan’s argument that Nagel is committed to a duty of justice to promote distributive justice abroad faces some significant obstacles and suggest that Dagan can ground her argument in a humanitarian duty that Nagel does accept. The upshot of the argument is that even if the sceptic is right to think that considerations of distributive justice do not apply beyond the state, multilateral tax cooperation is governed by a duty of states to prevent human rights deficits where they can.

Critical Notice
© Canadian Journal of Law & Jurisprudence 2019 

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I wish to thank Allison Christians and Ivan Ozai for helpful comments on an earlier draft of this article.


1. Dagan, Tsilly, International Tax Policy: Between Competition and Cooperation (Cambridge University Press, 2018Google Scholar). See also Tsilly Dagan, “International Tax and Global Justice” (2017) 18:1 Theor Inq L.

2. Thomas Nagel, “The Problem of Global Justice” (2005) 33:2 Philosophy and Public Affairs 113.

3. Dagan, supra note 1 at 211.

4. Nagel, supra note 2 at 121.

5. Ibid at 118.

6. For this distinction, and for the argument that Nagel does not clearly distinguish these two aspects of his view, see Andrea Sangiovanni, “Global Justice, Reciprocity, and the State” (2007) 35:1 Philosophy and Public Affairs at 6-7.

7. Nagel, supra note 2 at 128-29.

8. Dagan, supra note 1 at 185-86. The classic paper in defense of this argument is Reuven S Avi-Yonah, “Globalization, Tax Competition, and the Fiscal Crisis of the Welfare State” (2000) 113:7 Harv L Rev. See also Peter Dietsch, “Tax Competition and its Effects on Domestic and Global Justice” in Ayelet Bani, Miriam Ronzoni & Christian Schemmel, eds, Social Justice, Global Dynamics (Routledge, 2011).

9. Dagan, supra note 1 at 205.

10. Ibid at 206.

11. She is skeptical of the virtues of some forms of cooperation (such as those exemplified by the OECD BEPS project) which in some contexts she calls ‘cooperation’ simpliciter. See, e.g., Dagan, supra note 1 at 203.

12. Ibid at 204. She also writes that “multilateral regime must set terms that ensure the welfare of the weakest segments in poor countries that might otherwise be harmed by the cooperative arrangement” (ibid at 208) and that “for a multilateral regime established through cooperation to be justified it must improve (or at least not worsen) the welfare of the least well-off citizens in all the cooperating states” (ibid at 189).

13. Dagan calls the idea that treaties are solely aimed at avoiding double taxation the “tax treaty myth” (ibid at 72).

14. James, Aaron, Fairness in Practice: A Social Contract for a Global Economy (Oxford University Press, 2012CrossRefGoogle Scholar) at 211. This is what he terms the “collective due care principle” (ibid at 17).

15. Christian Barry, “The Regulation of Harm in International Trade: A Critique of James’s Collective Due Care Principle” (2014) 44:2 Can J Phil 255 at 262.

16. She proposes, for instance, “to use the multilateral cooperation as a framework for re-empowering states to domestically pursue justice within their borders.” (Dagan, supra note 1 at 206). See also ibid at 189, 210.

17. Dagan, supra note 1 at 199-202.

18. Ibid at 199.

19. Ibid at 202.

20. Ibid.

21. Nagel, supra note 2 at 129, n 14.

22. It should be pointed out that Nagel cannot escape this objection, however weak the condition of putative co-authorship. See Arash Abizadeh, “Cooperation, Pervasive Impact, and Coercion: On the Scope (not Site) of Distributive Justice” (2007) 35:2 Philosophy and Public Affairs 318. See AJ Julius, “Nagel’s Atlas” (2006) 34:2 Philosophy and Public Affairs 176.

23. Nagel, supra note 2 at 138.

24. Dagan, supra note 1 at 203.

25. Ibid at 188.

26. Dagan, supra note 1 at 211.

27. Miriam Ronzoni, “The Global Order: A Case of Background Justice? A Practice-Dependent Account” (2009) 37:3 Philosophy and Public Affairs 229 at 248.

28. Dietsch, Peter, Catching Capital: The Ethics of Tax Competition (Oxford University Press, 2015CrossRefGoogle Scholar); Peter Dietsch & Thomas Rixen, “Tax Competition and Global Background Justice” (2014) 22:4 J Political Phil 150.

29. Nagel, supra note 3 at 141.

30. Dagan, supra note 1 at 209-10.

31. Ibid at 200, 209.

32. This is how I interpret Dagan’s claim from the quoted passage that states “cannot hide—in the name of justice—behind their unjust … partners as mediators of justice”.

33. Nagel, supra note 2 at 121.

34. Rawls, John, The Law of Peoples (Harvard University Press, 1999Google Scholar) at 37.

35. Nagel, supra note 2 at 135.

36. Ibid.

37. Ibid. And again, Nagel offers “universal human rights rather than the equality of peoples or societies as the source of the constraints on the external exercise of sovereign power” (ibid at 136).

38. Ibid at 143 [italics removed].

39. Nagel, supra note 2 at 118, 131.

40. Ibid at 119.

41. Miller, David, National Responsibility and Global Justice (Oxford University Press, 2007CrossRefGoogle Scholar) at 256.

42. Although Nagel once describes humanitarian duties as involving ‘charity’ (Nagel, supra note 2 at 140) he also writes that the “urgent current issue is what can be done in the world economy to reduce extreme global poverty” and even suggests that, in the face of extreme poverty, domestic distributive justice may be “a side issue” (ibid at 118).

43. Nagel, supra note 2 at 131.

44. Ibid at 143.

45. See, e.g., Allison Christians, “Fair Taxation as a Basic Human Right” (2009) 9:1 International Review of Constitutionalism at 211-30; International Bar Association, “Tax Abuses, Poverty and Human Rights” (Report delivered at the International Bar Association’s Human Rights Institute Task Force on Illicit Financial Flows, Poverty and Human Rights, October 2013) at 2, 97, 103.

46. Bar Association’s Human Rights Institute 2013 at 59.

47. Dagan, supra note 1 at 210, 211.

48. Dagan, supra note 1 at 166 ff, rightly points out there may be a range of reasons why low-income countries cooperate against the interests of their populations, such as network effects of the treaty system and the agenda-setting influence of high-income countries.

49. The same argument applies to Dagan’s observation that harmonization of tax rates may impede domestic distributive justice in some countries because “the government may be corrupt or captured and hence less inclined to use the funds for redistribution” (Dagan, supra note 2 at 210). On the basis of this observation the conclusion should be that corrupt or captured local government officials have violated a duty of justice. It does not entail, necessarily, that the international community has a duty of justice to pursue alternative policies.

50. See, e.g., David Miller, “Taking up the slack? Responsibility and Justice in situations of partial compliance” in Carl Knight & Zofia Stemplowska, eds, Responsibility and Distributive Justice (Oxford University Press, 2011) at 230-45.

51. I do not here mean to disagree with Dagan’s claim that it may be best not to harmonize tax rates because, while it would shore up states’ capacity to generate revenue, it may be offset by greater capital outflows, particularly in low-income countries. (Dagan, supra note 1 at 210). The point is that insofar as Dagan is concerned to defend the claim that the international taxation regime should promote capital flows to low-income countries she can rest her institutional proposal on a humanitarian duty rather than a duty of justice.