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Free keywords:
democracy, individual taxation, tax incentives, tax competition, globalization, taxpayer mobility, tax equity, political rights, voting, citizenship, judicial review, constitutional safeguards, comparative
Abstract:
Ongoing globalization and increased taxpayer mobility not only exacerbate the current inadequacies when allocating taxing rights but also intensify already existing tax competition between states as individual states have begun to use formal citizenship as a tax incentive when attracting high-income earners, highly skilled workers and high-net value individuals. (A. Christians, Buying in: Residence and Citizenship by Investment, 62 St. Louis U. L.J. 51 (2017)). This new tax incentive challenges the traditional perception of formal citizenship as the basis for bestowing political rights and benefits as it may be argued that this practise erodes its value and meaning in addition to emphasizing the differentiation between individuals regarding their state of origin (particularly noticeable when considering EU citizens compared to non-EU citizens) and economic status.
At the present time, mobile individuals may, as a result of disparities between tax allocations, formal citizenship and voting privileges, contribute financially to a state yet not be afforded the opportunity to exercise influence over their tax situation due to the lack of formal citizenship and voting privileges in said state. The group who may influence taxation and public spending (tax and spend) through voting, therefore, is not always the same as those who pay taxes. This issue is naturally complex as the group of individuals excluded from such political influence is a highly diverse one encompassing high-net individuals to stateless persons seeking asylum who are subject to individual circumstances and needs.
This article separates itself from previous research within the tax scholarship as it does not focus on tax nexus nor on the right to participate in democratic influencing but rather on how individuals may influence tax and spend themselves with methods other than traditional voting. Otherwise stated, would it be possible for individuals who contribute to a state financially yet have no possibilities to exercise influence over tax and spend through voting due to the lack of formal citizenship be able to influence in a different manner? Tax rules and constitutional safeguards offering taxpayer protection gathered from Sweden, Germany and the United States are introduced in order to describe and analyse to what extent a taxpayer may exercise such influence.
The article concludes that affluent individuals often have greater access to such legal instruments, and it subsequently indicates that political power is awarded to the few rather than the many. Moreover, it argues for a current revision to how political rights and benefits are allocated, not only at domestic level but also in the international context. The article inherently forms one component of a larger body of work that was composed under the umbrella of political (tax) equity in a global context in which this author explored how increased taxpayer mobility challenges not only traditional legal frameworks that are associated with taxation but also the allocation of political rights and benefits. The traditional perception of citizenship as the basis for voting rights is, as illustrated through various publications linked to the project, found to be inadequate when dealing with mobile taxpayers.
