A country's right to levy taxes is a fundamental aspect of its sovereignty. Without the power to tax, a government would be unable to redistribute resources among its citizens and provide public goods. The question of how tax rights should be distributed is therefore one of the oldest and most important problems of tax theory. Increased international economic integration has made this question even more important, as a larger share of economic transactions take place across national borders, giving rise to situations in which more than one country is able to tax the same base.
How such conflicts are resolved affects both the ability of countries to redistribute resources domestically and the international distribution of tax revenues. The allocation of tax rights therefore raises important questions of distributive justice, questions that require a normative theory of the right to tax. This essay seeks to evaluate the current distribution of tax rights by examining whether it can in fact be justified within the main approaches to distributive justice.
Alexander W. Cappelen has a Ph.D. in Economics from the Norwegian School of Economics and Business Administration (NHH) and is currently undertaking research on international tax policy at the LOS Center in Bergen. He is also head of the Center for Ethics and Economics at the NHH.
* I want to thank Christian Barry, Herman Cappelen, Andreas Føllesdal, Raino Malnes, Hilde Nagel, Ole Gjems-Onstad, David Lyons, Thomas Pogge, Agnar Sandmo, and Samuel Scheffler for valuable comments on earlier versions of this paper. Financial support from the Norwegian Research Council (the Ethics Program) is gratefully acknowledged.