Monday, September 19, 2016

My article on the Treasury White Paper and EU state aid

There's no non-paywall-protected link for it yet, but today my short article "Friends Without Benefits? The Treasury and EU State Aid," ran in Tax Notes and Tax Notes International.

The abstract, appearing up front with my photo and bio, succinctly states: "In this report Shaviro identifies flaws in Treasury's White Paper condemning recent state aid investigations by the European Commission."

The paper departs from the consensus denouncing the state aid cases that seems not only to dominate Washington, but also to have significant, and at times personally surprising to me (in its shrillness and lack of balance or perspective), academic backing.  But the paper also departs in some ways from the main opposing view in U.S. academic circles, as I agree with the Treasury that the U.S. national interest might indicate favoring the scenario where U.S. companies, owned predominantly by U.S. individuals, pay less tax to other countries, rather than more.

What I object to the most is self-righteous cant in favor of the U.S. view, based on ignoring the possibility that we would want to do exactly what the EC is doing if the sides were reversed.  But it is also important to keep in mind that, even though we may have particular zero-sum interactions with our friends across the Great Pond (e.g., suppose that a given dollar of tax revenue will either go to them or to us), in the main our interactions are both friendly and positive-sum.  This ought to be kept in mind when one is deciding how aggressively to respond to disputes that arise in the zero-sum setting.

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