This paper aims to argue that the endogenous processes of profit shifting by MNEs and tax competition lead not just to inequality but constitute a case of global injustice. The provisions of the planned “two-pillar” reforms to global corporate taxation are then considered relative to the minimum conditions for background justice in taxation.
This paper is partly conceptual, based on relevant theoretical work in philosophy, and partly policy-focussed, based on an assessment of the OECD/G20 “two-pillar solution”.
The normative case for considering international tax competition as a global justice issue is developed, contrasting the cosmopolitan and non-cosmopolitan (“internationalist”) approaches. Three key minimum conditions for background justice in term of international taxation are established. This paper concludes that the two-pillar solution is likely to fail in global justice terms not because of its principles, which are sound, but because its redistributive scope is insufficiently great to have a major effect in correcting the inequality arising from tax competition.
This paper applies the philosophical concept of global justice to a specific issue in international business: MNE profit shifting and tax competition policy.
