Week 15 - Global Taxation

Question 1

Efficiency in taxation

Answer 1

Neoclassical / supply side economics

Goal: minimise distortions to economic behaviour (especially capital investment)

Emphasis on “tax neutrality”: taxes shouldn’t affect individual / firm decisions

Links to economic growth, not fairness

Question 2

Equity in taxation

Answer 2

Concerned with fair distribution of tax burdens

3 types:

Horizontal equity - same treatment for people in similar situations

Vertical equity - those with greater ability to pay should pay more

Inter-nation equity - fair tax allocation across countries (especially Global south vs north)

Question 3

Efficiency thesis - key arguments

Answer 3

High taxes distort economic behaviour (e.g. investment, savings, work)

Governments should lower corporate and income taxes to attract capital

Tax burden is often shifted to labour and consumption (e.g. VAT).

Leads to “race to the bottom” between countries on tax rates

Question 4

Efficiency thesis - example

Answer 4

US Tax Reform Act (1986)

Cut marginal income tax rates to reduce capital / brain drain

A classic supply-side reform to enhance efficiency

Question 5

Efficiency thesis - capital mobility as prisoner’s dilemma

Answer 5

Countries compete to keep / attract investment by undercutting tax rates

Globally inefficient but rational for each actor

Question 6

SAPs

Answer 6

Structural Adjustment Programme

Led to:
- Lower trade/export taxes
- Weakened incentives for local production
- Greater reliance on VAT => regressive effects on the poor
- Reduced state revenue overall, especially in Global south

Question 7

Equity thesis - key arguments

Answer 7

Taxes should redistribute wealth and promote long-term investment in social welfare

Dynamic efficiency: redistribution today → higher productivity and growth tomorrow

Tax justice = political representation + legitimacy (social contract idea).

Question 8

Equity thesis - policy tools

Answer 8

Tobin Tax: 0.1% on currency transactions to discourage speculation

15% global minimum corporate tax: supports inter-nation fairness

UN Resolution: calls for inclusive global tax cooperation (Global South voice)

Question 9

Colonial foundations of global taxation

Answer 9

1. UK Income Tax Origins
   - Introduced in 1798 (war against revolutionary France)
   - Reintroduced in 1853 under Gladstone as a social contract reform
2. Bayly (1994): “Empire-at-Arms”
   - British military spending financed by India
   - Shifted financial burden away from British workers onto colonised subjects
3. Naoroji (1859): “Displaced Multiplier”
   - “Taxes raised in one country and spent in another are a loss to the taxed country”
   - Colonies taxed, but spending occurred elsewhere => no local economic benefit

Question 10

Offshore finance as colonial legacy

Answer 10

UK created offshore jurisdictions via tax concessions to colonies

These evolved into modern tax havens and offshore financial centres

Modern example: South Dakota trusts
- US state with extremely lax trust regulation
- Holds £273bn in assets - formerly “offshore” finance is now being onshored

Question 11

Koram - central thesis

Answer 11

• The author argues that the current global tax system is dominated by rich countries and biased against the Global South
• Developing countries have little say in how international tax rules are made, while multinational corporations and wealthy individuals avoid taxes through complex systems that shift profits to tax havens
• Pushes for a UN-led global tax body to create fairer rules and strengthen developing countries’ ability to raise revenue

Question 12

Koram

Argument 1: Global tax rules are controlled by the OECD, favouring rich countries

Content

Answer 12

• The OECD controls the global tax agenda through initiatives like BEPS and the Inclusive Framework
• While these are presented as inclusive, the rules are designed and dominated by wealthy countries
• Developing countries are often pressured to join but have little influence over the outcomes
• The process does not consider the challenges faced by developing economies, such as weak administrative capacity and heavy dependence on corporate tax

Question 13

Koram

Argument 1: Global tax rules are controlled by the OECD, favouring rich countries

Example

Answer 13

The OECD’s Inclusive Framework has more than 135 countries, but only a handful (the wealthiest) have actual decision-making power

Question 14

Koram

Argument 1: Global tax rules are controlled by the OECD, favouring rich countries

So what?

Answer 14

If developing countries have no real voice in global tax decisions, international tax policy will continue to reflect the interests of the Global North, harming the fiscal sovereignty of the South and deepening global inequality

Question 15

Koram

Argument 2: Multinational corporations use tax avoidance strategies that exploit weak international rules

Content

Answer 15

• Corporations exploit legal loopholes using artificial arrangements like intra-firm loans, transfer pricing, and shell companies
• Because tax rules are based on the arm’s length principle and separate accounting, companies can shift profits away from where value is actually created
• This creates massive revenue losses for countries where the economic activity takes place - especially in developing economies that rely more heavily on corporate income tax

Question 16

Koram

Argument 2: Multinational corporations use tax avoidance strategies that exploit weak international rules

So what?

Answer 16

• Global tax rules based on outdated principles fail to capture real economic substance, undermining the ability of poorer countries to raise funds for essential services like healthcare and education
• It also leads to greater dependence on foreign aid or debt

Question 17

Koram

Argument 3: Existing reform efforts do not address structural inequality in tax rule-making

Content

Answer 17

• The OECD’s two-pillar plan has been promoted as a global solution, but in reality, it favours rich countries
• The minimum tax rate (15%) is too low and allows exemptions for big multinationals
• Pillar 1 gives taxing rights based on sales, which benefits market-rich countries (mostly in the Global North) rather than countries where labour and production occur
• Furthermore, developing countries are asked to give up their right to use unilateral tax measures (like digital service taxes) in exchange for minor revenue gains under Pillar 1

Question 18

Koram

Argument 3: Existing reform efforts do not address structural inequality in tax rule-making

Example

Answer 18

The United States pushed for the global minimum tax but also demanded a “safe harbour” to protect its tech giants like Google and Amazon

Question 19

Koram

Argument 3: Existing reform efforts do not address structural inequality in tax rule-making

So what?

Answer 19

The reforms look inclusive but preserve a structurally unequal system, limiting the policy space for developing countries and reinforcing the dominance of Global North interests in international taxation

Question 20

Koram

Argument 4: A UN-led global tax body would offer a fairer alternative

Content

Answer 20

• A UN tax body would give equal voice to all countries and allow developing nations to raise issues that affect them most - like taxing extractive industries and preventing illicit financial flows
• It could promote unitary taxation (treating multinationals as single global firms) and address the failure of fragmented national tax systems
• This would shift the global tax system to being democratic and representative, supporting development goals and sovereign financing

Question 21

Koram

Argument 4: A UN-led global tax body would offer a fairer alternative

So what?

Answer 21

A UN-led tax body could help fix the power imbalance in global taxation and give developing countries a chance to fund their own development - reducing reliance on aid and allowing more independent economic policymaking

Question 22

Koram

Strengths

Answer 22

1. The author exposes the power imbalance in global tax governance
2. The author links tax injustice directly to development, inequality, and fiscal dependency
3. The author offers a concrete and realistic institutional alternative in the UN tax body

Question 23

Koram

Strength - The author exposes the power imbalance in global tax governance

Answer 23

• One strength is the author’s clear demonstration that the global tax system is not neutral, but structurally biased in favour of rich countries - through the dominance of the OECD and the exclusion of developing countries from decision-making
• This means global tax rules are written by and for high-income countries, even though they claim to be inclusive
• This is important to our understanding of global taxation because it shows that taxation is not just an administrative issue - it’s a question of global economic power, sovereignty, and legitimacy

Question 24

Koram

Strength - The author links tax injustice directly to development, inequality, and fiscal dependency

Answer 24

• Another strength is the author’s ability to frame global tax avoidance not just as a loss of revenue, but as a barrier to structural development in the Global South
• This means the problem is not just that multinationals avoid taxes, but that this avoidance deepens inequality and makes developing countries more reliant on aid, debt, and external conditions
• This is relevant because tax policy is often treated as a side issue - separate from trade, finance, or growth models
• The author shows that tax justice is central to the global development agenda and essential to fiscal sovereignty
• It also provides insight that without fair global tax rules, developing countries cannot implement their own economic policies or achieve SDG-style development goals

Question 25

Koram Strength - The author offers a concrete and realistic institutional alternative in the UN tax body

Answer 25

- A third strength is that the paper doesn’t just critique the OECD model - it presents a clear institutional alternative: an intergovernmental, legally mandated UN tax body where all countries have equal rights in designing tax rules - This means the proposal goes beyond critique and into solution-building - it shows that another system is not only desirable but practically possible - This is important because it challenges the assumption that club-based governance (like the OECD or G7) is the only viable option - It also provides insight that developing countries need institutional voice, not just policy advice, and that technical reforms (like BEPS or the Two-Pillar approach) are insufficient without changing who writes the rules in the first place.

Question 26

Koram Weaknesses

Answer 26

1. The proposal for a UN tax body lacks practical implementation detail 2. The critique underplays the technical complexity of international tax cooperation 3. The role of domestic political will and tax policy reform is underexplored

Question 27

Koram Weakness - The proposal for a UN tax body lacks practical implementation detail

Answer 27

- One weakness is that while the author calls for a UN-led global tax body as an alternative to the OECD, the text offers limited detail on how such a body would operate, enforce rules, or resolve disputes between states - This means the argument risks being seen as idealistic - focusing more on principle than on feasibility, especially given the UN’s known institutional limitations and the reluctance of powerful countries to surrender fiscal control - This is weak in our understanding of global taxation because it doesn’t address the complex realities of global negotiations, including the power of veto-holding states or differing economic models among UN members - This limits the proposal’s credibility in practical international policymaking - without a clearer roadmap, the argument might fall short in influencing real reform or convincing sceptical stakeholders of its viability

Question 28

Koram Weakness - The critique underplays the technical complexity of international tax cooperation

Answer 28

- Another weakness is that the author gives little attention to the technical difficulties in designing fair tax rules across countries with different economic structures, tax systems, and legal capacities - This means the analysis may understate the challenges of moving to alternative systems like unitary taxation or enforcing a global minimum tax in countries with weak tax infrastructure - This is weak because effective global tax coordination demands highly technical consensus on definitions, enforcement, and data-sharing, which are often difficult even among advanced economies - By overlooking technical feasibility, the argument risks simplifying a highly complex field. This could undermine trust in the practicality of reform, especially in resource-constrained states

Question 29

Koram Weakness - The role of domestic political will and tax policy reform is underexplored

Answer 29

- A third weakness is that the text treats the international system as the main obstacle to fair taxation, but gives too little attention to domestic political choices - like tax exemptions for elites, corruption, or weak enforcement - that also fuel tax injustice - This means the critique may unintentionally imply that all developing countries are passive victims of global structures, rather than also being responsible for reforming their own domestic tax policies - This is weak in our understanding of global taxation because international tax justice requires both external reform and internal capacity-building - domestic political economy is central to whether global rules translate into actual revenue - This weakens the argument’s usefulness for policymakers who need to balance external advocacy with internal action. It also risks reinforcing dependency narratives by overlooking the agency of states to shape their own fiscal futures

Question 30

Cobham - central thesis

Answer 30

- The author argues that tax policy has been dangerously neglected in development debates, with developing countries pushed toward tax models that are unsuitable for their economic conditions - Instead of prioritising revenue stability and redistribution, many tax systems have shifted toward indirect taxes (like VAT and sales tax) under pressure from trade liberalisation, often weakening their capacity to reduce poverty, inequality, and state fragility

Question 31

Cobham Argument 1: Global taxation structures have shifted towards indirect taxes, especially in poor countries, due to trade liberalisation Content

Answer 31

- Trade liberalisation has reduced trade tax revenues across all regions, particularly in South Asia and Sub-Saharan Africa - In trying to fill this gap, countries have turned to indirect sales taxes - But this transition hasn’t worked well - poorer countries have low tax effort and buoyancy, meaning they are unable to increase revenue even when their economies grow - This tax shift leads to weaker revenue systems, because poorer countries were historically reliant on trade taxes for funding - Trade liberalisation, then, has destabilised government budgets without offering suitable alternatives

Question 32

Cobham Argument 1: Global taxation structures have shifted towards indirect taxes, especially in poor countries, due to trade liberalisation Examples

Answer 32

- Mexico replaced trade tax revenue with sales taxes and improved its direct tax collection to over 30% of expenditures - Côte d’Ivoire still relies primarily on trade taxes

Question 33

Cobham Argument 1: Global taxation structures have shifted towards indirect taxes, especially in poor countries, due to trade liberalisation Stats

Answer 33

- Baunsgaard and Keen (IMF): Low-income countries replaced almost none of lost trade tax revenues; middle-income countries replaced only 45–65% - South Asia and Sub-Saharan Africa still rely on trade taxes for over one-third of their total tax revenue.

Question 34

Cobham Argument 1: Global taxation structures have shifted towards indirect taxes, especially in poor countries, due to trade liberalisation So what?

Answer 34

- This means trade liberalisation has weakened tax systems in poor countries, leading to unstable budgets, underfunded public services, and growing poverty - It also shows that international tax shifts driven by global economic policy can harm rather than help development, especially when countries are forced to conform to a “one-size-fits-all” tax model

Question 35

Cobham Argument 2: The neglect of taxation in global development policy has led to misaligned reform priorities Content

Answer 35

- Tax has been left out of mainstream development debates - instead, countries are pushed to adopt technical reforms aimed at making tax systems more efficient, often copying rich country models without considering local economic realities This has two consequences: 1. Developing countries are stuck playing “catch-up” with rich country systems. 2. Their capacity to raise revenue and redistribute wealth is weakened. - International institutions like the World Bank have focused too much on efficiency and too little on the structural roles of taxation - like building state capacity or reducing inequality This has blocked the development of strong, sovereign tax systems

Question 36

Cobham Argument 2: The neglect of taxation in global development policy has led to misaligned reform priorities Example

Answer 36

IMF and DFID have promoted VAT and indirect tax expansion, despite evidence of its regressive effects

Question 37

Cobham Argument 2: The neglect of taxation in global development policy has led to misaligned reform priorities Stats

Answer 37

- Figure 7: The poorest countries have the lowest shares of direct taxes and the highest shares of indirect taxes in their total revenue - Teera (2002): 54% of Sub-Saharan African countries have below-average tax effort; 57% have below-average tax buoyancy

Question 38

Cobham Argument 2: The neglect of taxation in global development policy has led to misaligned reform priorities So what?

Answer 38

- This neglect leads to a mismatch between what reforms are implemented and what reforms are actually needed - Countries end up with tax systems that collect little revenue, increase inequality, and fail to support long-term development - It highlights how global economic policy can unintentionally undermine state-building in the Global South

Question 39

Cobham Argument 3: Indirect taxes harm inequality and reduce welfare in poor countries Content

Answer 39

- The paper critiques the shift to VAT and sales taxes, especially when they replace trade taxes - Drawing on Emran and Stiglitz (2002), it argues that indirect taxes hurt the poor and fail to generate welfare gains when the informal sector is large - Because poor people spend more of their income on goods and services, sales taxes hit them harder than direct taxes - In informal economies - where many small businesses and low-income individuals operate - VAT often doesn’t even apply. This leads to less revenue and greater inequality

Question 40

Cobham Argument 3: Indirect taxes harm inequality and reduce welfare in poor countries Example

Answer 40

The UK Commission for Africa (2005) advises that liberalisation “must not be forced on Africa.”

Question 41

Cobham Argument 3: Indirect taxes harm inequality and reduce welfare in poor countries Stats

Answer 41

IMF: In poor countries, each dollar of lost trade tax revenue is replaced by only 28–49 cents

Question 42

Cobham Argument 3: Indirect taxes harm inequality and reduce welfare in poor countries So what?

Answer 42

- This means that common global tax reform strategies may be making things worse, not better - For developing countries, copying VAT-based systems without compensatory redistribution leads to deeper poverty - This argument calls for a rethink of what effective taxation looks like in the Global South

Question 43

Cobham Argument 4: Redistribution through taxation is weak in poor countries because direct taxes and transfers are underdeveloped Content

Answer 43

- Even where redistribution is urgently needed (e.g. in Latin America), countries struggle to deliver it through taxes or transfers - The paper shows that cash transfers are rare, and that direct taxes are underused - Weak tax administration, corruption, and elite resistance prevent governments from collecting and redistributing income effectively - In contrast, rich countries use both progressive taxes and cash transfers to reduce inequality significantly - Developing countries, however, are stuck in a trap: they lack the revenue and the capacity to build redistributive systems, yet are pushed to adopt reforms that increase regressive taxation

Question 44

Cobham Argument 4: Redistribution through taxation is weak in poor countries because direct taxes and transfers are underdeveloped Example

Answer 44

US data shows that cash transfers are the main form of redistribution in rich countries

Question 45

Cobham Argument 4: Redistribution through taxation is weak in poor countries because direct taxes and transfers are underdeveloped Stats

Answer 45

Figure 6: Sweden removes over half of its pre-tax inequality through redistribution. Brazil and South Africa do not

Question 46

Cobham Argument 4: Redistribution through taxation is weak in poor countries because direct taxes and transfers are underdeveloped So what?

Answer 46

- This shows that global taxation structures actively limit redistribution - For development to be meaningful, taxation must reduce inequality, not deepen it - But under current models, developing countries are pushed into systems that collect less and distribute even less

Question 47

Cobham “Governments lose in total revenue roughly between…”

Answer 47

“…50% and 70% of the loss of trade taxes due to liberalisation.”

Question 48

Cobham “Redistribution in rich countries is often…”

Answer 48

“…dominated by cash transfers – a feature lacking in most poor country systems.”

Question 49

Cobham Strengths

Answer 49

1. The author directly links taxation structures to state fragility, inequality, and development outcomes 2. The author exposes how global reforms like trade liberalisation have worsened tax collection in low-income countries 3. The author highlights how imposed tax reform models ignore political, administrative, and social realities of developing countries

Question 50

Cobham Strength - The author directly links taxation structures to state fragility, inequality, and development outcomes

Answer 50

- This is a strength because it positions taxation not as a neutral tool, but as a core element of how states build capacity and reduce poverty - This means tax policy is central to whether a country can fund public services and stabilise its political system - This is important/relevant to our understanding because it connects global tax structures to real-world development outcomes, rather than isolating them as technical or domestic issues - It also provides insight fiscal sovereignty and redistribution capacity are foundational to sustainable development

Question 51

Cobham Strength - The author exposes how global reforms like trade liberalisation have worsened tax collection in low-income countries

Answer 51

- This is a strength because it challenges the assumption that trade openness automatically strengthens economies - This means many poor countries now collect significantly less tax revenue, despite growing need for development finance - This is important/relevant to our understanding because it shows how global economic policy can have unintended fiscal consequences that weaken state structures - It also provides insight that tax loss from liberalisation is not neutral - it leads to instability and inequality if not replaced with context-specific alternatives

Question 52

Cobham Strength - The author highlights how imposed tax reform models ignore political, administrative, and social realities of developing countries

Answer 52

- This is a strength because it critiques the imposition of standardised VAT-based systems on countries with large informal economies - This means such reforms often fail to increase revenue or reduce inequality, and may instead worsen both - This is important/relevant to our understanding because it shows that tax system design must be tailored to context, not copied from rich countries - It also provides insight that effective taxation requires understanding domestic power structures and governance limits

Question 53

Cobham Weaknesses

Answer 53

1. The author underplays the technical and administrative barriers to direct taxation in low-income countries 2. The critique of indirect taxes lacks nuance about their role in transitional or hybrid economies 3. The author does not sufficiently address the political resistance to progressive tax reform

Question 54

Cobham Weakness - The author underplays the technical and administrative barriers to direct taxation in low-income countries

Answer 54

- This is a weakness because while the argument favours more direct taxation, it does not fully explore the challenges of enforcing it in states with weak institutions and large informal sectors - This means the recommendation to shift toward direct taxation may be unrealistic without capacity-building, leading to ineffective implementation - This is weak in our understanding of global taxation because it overlooks institutional fragility and enforcement constraints that shape revenue potential - New institutional economics would argue that tax reform must first address administrative capability and compliance culture, which the author largely assumes rather than critically engages with - This limits the practical relevance of the analysis for policymakers who need viable paths for reform, not just normative goals

Question 55

Cobham Weakness - The critique of indirect taxes lacks nuance about their role in transitional or hybrid economies

Answer 55

- This is a weakness because the author frames VAT and sales taxes mostly as regressive, without recognising that some indirect taxes may still be useful in contexts where direct tax collection is not yet feasible - This means the argument risks dismissing indirect taxation as entirely negative, when in practice, it often plays a stabilising role in fragile or informal economies - This is weak in our understanding of global taxation because it simplifies the role of tax instruments and doesn’t fully account for contextual trade-offs between equity and revenue - A balanced tax mix, including indirect taxes, can be essential in early-stage development, especially where administrative data systems are weak - This makes the critique appear ideologically rigid and potentially unhelpful for countries that still rely on VAT or customs duties as their only reliable sources of public finance

Question 56

Cobham Weakness - The author does not sufficiently address the political resistance to progressive tax reform

Answer 56

- This is a weakness because the argument assumes that better tax design (e.g. more direct taxes) will be adopted if recommended, but does not confront the domestic political economy of tax avoidance and elite capture - This means it misses why many governments actively avoid progressive tax reform due to pressure from wealthy elites or fear of political backlash - This is weak in our understanding of global taxation because it underestimates how power dynamics, corruption, and political incentives shape tax outcomes beyond technical design - Marxist thinkers, would argue that tax systems reflect elite interests, and reform is unlikely without structural political change - This weakens the reform roadmap by ignoring the real-world politics of taxation, making the recommendations harder to implement without addressing power imbalances

Question 57

Hill and Myatt - central thesis

Answer 57

- The authors argue that mainstream economics misrepresents taxation and redistribution by portraying them as inefficient or harmful to economic growth - In reality, tax systems are shaped by political choices, and can be used to promote fairness, social stability, and development if structured equitably and transparently

Question 58

Hill and Myatt Argument 1: Mainstream economic theory exaggerates the trade-off between equity and efficiency in taxation Content

Answer 58

- Mainstream models claim that higher taxes cause people to work less, invest less, and reduce overall productivity - The authors challenge this, showing that the evidence is weak and the assumptions unrealistic - For example, many people can’t choose how many hours they work, and high-income earners often work more even with higher taxes - The equity-efficiency trade-off is presented as scientific fact in textbooks, but it’s a political argument disguised as economics. The supposed inefficiency of taxation is often exaggerated to justify low taxes for the rich and limited redistribution.

Question 59

Hill and Myatt Argument 1: Mainstream economic theory exaggerates the trade-off between equity and efficiency in taxation Example

Answer 59

OECD data is cited to show that countries with higher taxes, like Sweden and Denmark, have stronger employment rates than lower-tax countries like the US

Question 60

Hill and Myatt Argument 1: Mainstream economic theory exaggerates the trade-off between equity and efficiency in taxation So what?

Answer 60

- This argument shows that the economic case against taxation is often ideological - By revealing the bias in standard models, the authors make space for progressive global taxation policies that support redistribution and development without assuming economic harm

Question 61

Hill and Myatt Argument 2: Taxation systems reflect political priorities, not technical limits Content

Answer 61

- Tax systems are not neutral - they are designed by governments that make choices about who pays, how much, and for what purpose - Governments can choose to tax wealth, corporations, or capital - but often avoid doing so due to elite influence - The text shows how these choices are hidden behind technical jargon, making tax policy seem objective when it reflects political and class interests - This helps explain why global tax structures favour corporations and wealthy individuals, especially in cross-border contexts where loopholes and avoidance are easy

Question 62

Hill and Myatt Argument 2: Taxation systems reflect political priorities, not technical limits Example

Answer 62

The Canadian government reduced corporate taxes from 38% in 1981 to 15% in 2012, even though there was no evidence this boosted investment

Question 63

Hill and Myatt Argument 2: Taxation systems reflect political priorities, not technical limits So what?

Answer 63

- Understanding that taxation is political - not purely economic - reveals why global tax rules often favour capital mobility and corporate profit, at the expense of development - It shows how international economic rules are shaped by power, not just models

Question 64

Hill and Myatt Argument 3: The rich benefit most from current tax systems and resist reform Content

Answer 64

- The authors show that global tax systems are shaped to benefit elites - regressive taxes like VAT hit the poor hardest, while the rich use offshore accounts and legal avoidance to minimise their contributions - The text links this directly to global economic inequality, explaining how international tax rules are soft on capital flight and hard on basic consumption - It also criticises the idea that wealth taxes are “too hard to implement,” showing that it is political will that prevents them

Question 65

Hill and Myatt Argument 3: The rich benefit most from current tax systems and resist reform So what?

Answer 65

This argument explains why meaningful global tax reform is so difficult: the people with the most power to shape the system are also the ones who benefit from keeping it unequal

Question 66

Hill and Myatt “Inequality is what economics…”

Answer 66

“…should be all about”

Question 67

Hill and Myatt “There is essentially no…”

Answer 67

“…relationship between equity and efficiency”

Question 68

Hill and Myatt Strengths

Answer 68

1. The author challenges the assumed equity-efficiency trade-off that underpins global tax conservatism 2. The author exposes how tax systems reflect political power and protect elite interests 3. The author critiques textbook biases that shape how future policymakers and economists think about tax

Question 69

Hill and Myatt Strength - The author challenges the assumed equity-efficiency trade-off that underpins global tax conservatism

Answer 69

- This is a strength because it questions a core belief in mainstream economics that redistribution through taxation harms economic growth - This means it opens space to argue that fairer taxation does not necessarily reduce productivity or investment - This is important/relevant to our understanding because many global tax rules are designed to minimise taxation on capital based on this assumption - It also provides insight that inequality and under-taxation of the wealthy may itself reduce long-term efficiency and development

Question 70

Hill and Myatt Strength - The author exposes how tax systems reflect political power and protect elite interests

Answer 70

- This is a strength because it reframes tax policy as a result of political choices rather than neutral technical design - This means global tax structures favour the wealthy not by accident, but by design and resistance to reform - This is important/relevant to our understanding because international tax avoidance, weak wealth taxation, and capital flight are not technical failures - they are outcomes of deliberate global governance choices - It also provides insight that traditional economic models ignore: that redistribution is not absent due to inefficiency but due to political resistance from those who benefit from inequality

Question 71

Hill and Myatt Strength - The author critiques textbook biases that shape how future policymakers and economists think about tax

Answer 71

- This is a strength because it targets the ideological foundations that justify regressive tax systems and limited redistribution - This means it helps readers unlearn assumptions that progressive taxation is inefficient or undesirable - This is important/relevant to our understanding because these ideas influence global institutions like the IMF and World Bank, which advise on tax reform in the Global South - It also provides insight that changing global tax rules also requires changing the economic narratives that shape them

Question 72

Hill and Myatt Weaknesses

Answer 72

1. The argument does not fully explore the administrative and institutional barriers to implementing progressive taxation globally 2. The critique of mainstream models focuses on bias but underplays where such models are useful 3. The text lacks detailed proposals for institutional reform at the global level

Question 73

Hill and Myatt Weakness - The argument does not fully explore the administrative and institutional barriers to implementing progressive taxation globally

Answer 73

- This is a weakness because while the text supports more redistribution through tax, it doesn’t address how poor enforcement in many countries limit this - This means the recommendation to expand progressive taxation may not be viable in states with limited infrastructure, data, or trust - This is weak in our understanding of global taxation because it overlooks practical implementation constraints, especially in the Global South - Institutionalist economists would argue that tax reform must be designed with realistic enforcement capacities in mind, which the authors largely sidestep - This makes the analysis seem idealistic, reducing its usefulness for policymakers in fragile or informal economies

Question 74

Hill and Myatt Weakness - The critique of mainstream models focuses on bias but underplays where such models are useful

Answer 74

- This is a weakness because the text is highly critical of textbook assumptions but doesn’t acknowledge where efficiency-focused models might have valid insights, especially in highly mobile capital environments - This means it risks throwing out all aspects of conventional analysis, even when some models can help evaluate tax impact on investment or labour - This is weak in our understanding of global taxation because effective tax policy requires a balance between fairness and economic performance - Neoclassical economists would argue that ignoring incentives and distortions entirely is as flawed as exaggerating them, creating a false binary - The lack of nuance may weaken the argument’s credibility among mainstream policymakers who work within incentive-aware frameworks

Question 75

Hill and Myatt Weakness - The text lacks detailed proposals for institutional reform at the global level

Answer 75

- This is a weakness because while the chapter critiques global inequality in taxation, it doesn’t offer a clear vision for how governance structures could be improved - This means the argument highlights the problems but leaves a gap in practical solutions for multinational tax avoidance or capital mobility - This is weak in our understanding of global taxation because meaningful reform needs both critique and institutional pathways for change - The authors miss an opportunity to push for structural reform beyond national politics - The absence of institutional alternatives may make the argument feel disconnected from current efforts to reform the international tax system, such as the UN Tax Convention debate.