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Global Taxation, Global Reform, and Collective Action

Shmuel Nili

Abstract

This article asks how global tax reform relates to other emerging proposals for global economic reform. Specifically, I will try to contribute to the philosophical understanding of this relationship, by comparing global tax reform with a reform seeking to end dictators’ trading privileges in their peoples’ natural resources. Through this comparison, I intend to establish two main claims. At a concrete, practical level, I hope to show that reform of dictators’ resource privilege will be easier to initiate than legal reform against global tax avoidance. Yet the heart of this essay is dedicated to supporting this claim through an argument at a more abstract, methodological level, which intends to make a broader contribution. This argument focuses on a key obstacle facing global taxation reforms, in the form of collective action problems. My key conceptual contribution lies in an attempt to distinguish between two forms of collective action situations (group and rigorist action), arguing that only one of them involves moral collective action problems, while in the other these problems dissolve. I seek to show that this fortunate case obtains for reform of dictators’ resource privilege, but not for global tax reform.

Acknowledgements

For helpful discussions and suggestions, I am grateful to Richard Adams, Tom Andreassen, Gillian Brock, Thomas Campbell, Elizabeth Krontiris, Robert Lepenies, Zorka Millan, Thomas Pogge, and Ian Shapiro.

  1. 1

    Thomas Nagel, “The Problem of Global Justice,” Philosophy & Public Affairs 33 (2005): 113–147.

  2. 2

    As emphasized recently in Peter Dietsch and Thomas Rixen, “Tax Competition and Global Background Justice,” Journal of Political Philosophy 16 (2012): 1–28.

  3. 3

    Thomas Pogge, “Reply to Critics,” in Alison Jaggar (ed.), Thomas Pogge and His Critics (London: Polity Press), 177.

  4. 4

    For the basic idea and the term “resource privilege” see Thomas Pogge, “Achieving Democracy,” Ethics and International Affairs 15 (2001): 3–23; See also Leif Wenar, “Property Rights and the Resource Curse,” Philosophy & Public Affairs 36 (2008): 2–32; 27–39; and my “Our Problem of Global Justice,” Social Theory and Practice 37 (2011): 629–653; “Democratic Disengagement: Towards Rousseauian Global Reform,” International Theory 3 (2011): 355–389.

  5. 5

    Solely for the purpose of normative analysis, I conceive of states as unitary actors for most of this essay. I relax this assumption toward the end.

  6. 6

    In World Poverty and Human Rights (Cambridge: Polity Press, 2002), chap. 5, Pogge discusses a similar idea under the name of “the sucker exemption.” However, Pogge focuses solely on the loss of competiveness excuse. I believe that this excuse alone does not suffice to exempt actors from undertaking solitary action, unless it is joined by the claim of ineffective sacrifice. But I will not argue for this belief here.

  7. 7

    Gillian Brock, “Taxation and Global Justice: Closing the Gap between Theory and Practice,” Journal of Social Philosophy 39 (2008): 161–184, at 174.

  8. 8

    Pogge, World Poverty, 128.

  9. 9

    This is particularly true if one reads Pogge’s claim as implying some kind of irrationality on the part of states that refuse to cooperate. After all, such refusal can often be perfectly rational. As Mancur Olson famously put it, “unless the number of individuals in a group is quite small, or unless there is coercion or some other special device to make individuals act in their common interest, rational self-interested individuals will not act to achieve their common or group interests.” The same logic applies to states as unitary actors. See Mancur Olson, The Logic of Collective Action (Cambridge, MA: Harvard University Press, 1971 [1965]), 2. Italics in the original.

  10. 10

    Robert Goodin, Utilitarianism as Public Philosophy (Cambridge: Cambridge University Press, 1995), 32.

  11. 11

    Note that this claim cannot be set aside by insisting that single agents ought to try to initiate collective action. For if “initiating” means merely calling on other parties to join a collective effort (“we should all do something”), then the duty to “initiate” such efforts is too weak to solve the assurance problem. Conversely, if “initiating” requires of a single agent to make tangible sacrifices to spur collective action (“in order to get all of us going, I will set an example by doing X…”), then it once again ignores the essence of the problem. I say more on this below.

  12. 12

    I will focus here on collective action situations in which solitary action by a single agent is either likely or certain to achieve not a portion of the collective goal, but rather nothing of the collective goal. Both group action and rigorist action fall under this subset of collective action situations. What separates these two types of collective action, as we will see, is the question of whether the collective goal is the only salient moral goal.

  13. 13

    Indeed, there were hardly any major firms based in affluent democracies that took solitary action and stopped offering bribes to corrupt foreign officials, during the decades in which affluent democracies considered such bribery perfectly legal (and often even tax-deductible).

  14. 14

    Things are obviously different with regard to tax evasion, since tax evasion is a crime – it is, quite literally, stealing revenue from the state. And as a matter of respect for law, the state ought to punish tax criminals, even if as a result of the punishment, the criminals simply leave the state.

  15. 15

    Thomas Pogge, World Poverty and Human Rights (London: Polity Press, second edition, 2008), 142, 148.

  16. 16

    One way to conceptualize this distinction would be to say that even if would be unjust for a people to prefer more revenue over a fairer tax system, such preference would still be legitimate, while complicity in theft from another people would be not merely unjust but also illegitimate. Alternatively, we may say that a people can waive its right to a fair tax system, but obviously cannot waive the rights (specifically, property rights) of other peoples.

  17. 17

    Thomas Nagel, The View from Nowhere (New York: Oxford University Press, 1986), 177.

  18. 18

    For these and similar cases see my “Humanitarian disintervention,” Journal of Global Ethics 7 (2011): 33–46.

  19. 19

    Cf. Audie Klotz, “Norms and Sanctions: Lessons from the Socialization of South Africa,” Review of International Studies 22 (1996): 173–190.

  20. 20

    This is the core idea of what is known as “liberal institutionalism” in international relations theory, the paradigmatic representative of which is Robert Keohane’s, After Hegemony: Cooperation and Discord in the World Political Economy (Princeton, NJ: Princeton University Press, 1984),

  21. 21

    From Oliver Wendell Holmes, Compania General De Tabacos De Filipinas v. Collector of Internal Revenue, 275 U.S. 87, 100, dissenting opinion (November 21st, 1927). Quoted above the entrance to the IRS building in Washington, DC.

Published Online: 2014-2-26
Published in Print: 2014-5-1

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