The current proposals to substitute consumption for income as the principal U.S. tax base have already been the topic of considerable commentary in these pages. However, one issue has received relatively little attention in the discussion of the various reform proposals: What potential complications are likely to arise if a single major player in the world's economy unilaterally adopts radical tax reform? The global economy is becoming more and more unified, with multinational corporations dominating world trade and trillions of dollars in portfolio investment flowing across national boundaries. In this economy, what would be the consequences if a single country, especially one as important as the United States, were to radically deviate from the tax policies adopted by its trading partners?
Avi-Yonah, Reuven S. and Linda Swartz. "U.S. International Treatment of Financial Derivatives." Tax Notes 74 (1997): 1703. (Work published when author not on Michigan Law faculty.)
Reprinted with the permission of Tax Analysts