Unlock tax planning solutions to

maximize your investment results.
achieve your financial goals.
comply with regulations.

Leverage a proprietary dataset from 190+ countries, Artificial Intelligence, and a network of top local experts.

Historic, Comparative and Evolutionary Analysis of Tax Systems


Tax reform is a constant process in most nations as governments continuously revisit their tax systems in response to economic, social, and political forces. Domestic legislative processes involving national lawmakers may be the most obvious source of change in the tax system in any independent nation, but international events, institutions, and individuals—while comparatively much less studied—are equally important contributors. Evolving political, social, and economic relationships among states, institutions, and individuals significantly impact the types of tax norms that arise internationally and take root nationally.[2 ] These relationships involve intellectual, political, and social ties among individuals and institutions that serve as vehicles for tax norm transmission[3]

Examining national tax reform experiences from the perspective of these ongoing relationships can help explain how contemporary tax politics take shape as well as identify challenges for effective tax policy reform efforts.

Three examples drawn from accounts of national tax reform prepared for a recent workshop on the topic of “Networks, Norms, and the Transnationalization of Tax Lawmaking” emerge as focal points for such examination.[4] The first account involves China‟s comprehensive tax policy reform of 1994, in which two globally – connected scholars are credited with playing a central formative role in shaping the future of tax policy in China. The second account involves Brazil‟s early adoption of value added taxation in 1958, in which reform progressed collaboratively through a combination of international intellectual and political developments. The third involves Turkey‟s relatively much later adoption of value added taxation in 1980, in which a coalition of international institutions and domestic leaders joined forces to enact significant tax reforms in a time of great socio-political upheaval.

Each of these accounts of national tax reform raises features of the global character of national tax politics in different ways. In each account, international events, individuals, and institutions contributed to tax reform by serving as critical junctures for tax norm transmission. The characteristics of these key events, individuals, and institutions—the agents of tax policy globalization—are of interest for those who study substantive tax policy, since these agents serve as transmitters and translators of knowledge and expertise on a global scale. Yet comparatively little research has been done to analyze the unique features that cause or allow specific agents to play their central role in tax policy globalization.

This Article initiates such research by exploring how each of the three examples demonstrates the impact on national tax policy of these agents of tax policy globalization. The focus is on the critical iterative relationships these agents create between politics and expertise, between ideas and implementation, and between the national and the international. Part I introduces the global context of tax policy with a conceptual structure for mapping the social relationships among the various contributors to national tax reform efforts. Part II considers the three accounts of national tax reform and identifies the global aspects of each, mapping the individual and institutional agents and the key relationships that led to specific policy choices. Part III analyzes the common features of the national/global relationships in these tax reform events, and explores how individual credibility, political effectiveness, and access to financial and political resources are necessary elements for tax policy norm transmission. The Article concludes with a call for more comparative and historical review of national tax reform as a means of increasing understanding with respect to the global contours of contemporary tax policy.


In order to understand how events, individuals and institutions effect change in tax policy, it is first necessary to consider the structure of taxation as a product of the legal system. In other words, tax law is, like most law, the product of politics, legislation, implementation, and compliance. Thus, depending on political structures and access of individuals to the lawmaking process, including through popular media as well as through direct legislative and administrative access, tax policy in most nations emerges through repeated interactions between lawmakers, tax experts, and affected parties in the public and private sector. These individuals are participants in the dynamic process of lawmaking and law enforcement that comprise the tax “rule of law.” As such, they are also agents of change, as they continually respond to each other.

Because of the diverse roles and characteristics played by a wide array of such agents, we must consider tax law as the product not just of national legislatures but of the many events, individuals, and institutions that impact how lawmakers define and shape the tax law. In order to understand how and why tax law evolves the way it does, we will need to consider both who is involved in initiating, marshaling, and implementing change, and how they effect change. This section presents a model for analyzing the agents and process of change in tax law. It does so by first outlining the relationship between formal tax law and tax law as it plays out in practice, or tax law in action. It then explores an analytical model of legal change from the field of bankruptcy, and finally uses that model as a template for a model for analysis of legal change in the field of tax law.


Lawmakers typically record tax law on the books what scholars describe as “formal law”[5] in the form of statutes, regulations, treaties, and interpretive guidance issued by government officials, through administrative and judicial interpretation.[6] But as every scholar of tax law is aware, tax law on the books is only a starting point for analysis of the tax system. In practice, the rule of tax law is a complex system involving dynamic interpretation, risk assessment, and even error in the application of formal tax law by professionals lawyers, accountants, consultants, business managers, etc. and by nonprofessionals on their own behalf. We may refer to the outcome of the practices of all of these actors as the tax law “in action.” This terminology evokes the essentially dynamic spirit of tax lawasit plays out in practice.

Tax law in action involves the necessarily imperfect implementation as well as non-implementation and outright faulty implementation of tax law on the books. Some of the imperfection in implementation arises because the language used to explain the formal law leaves room for multiple interpretations; some because taxpayers and their advisors prefer results other than those apparently intended by the legislator‟s chosen language. As every tax practitioner and compliance officer is aware, some interpretation is in good faith and with pure motives, some is in bad faith and involves taking risks with respect to the expected level of compliance, and much lies in a murky area between these poles.[7]

The calculations of obligation, ethics, risk, and reward differ from nation to nation and within nations from practice to practice and from taxpayer to taxpayer. When the myriad decisions of hundreds, thousands or even millions of taxpayers are considered as a whole, those responsible for implementing the system, whether from the private sector, the academic community or the compliance and administrative sector, may complain that change is needed, and institute a new cycle of change.[8] Moreover, these individuals and actors often play dual roles by participating in international informal or “soft law” networks where they influence and are influenced by collaborations with their counterparties from other nations.[9]

In tax law, this international networking occurs mainly through such intergovernmental venues as the OECD, whose membership comprises thirty industrialized countries, including the United States, Canada, Australia, and most of Western Europe. The OECD is particularly important in understanding the international agents of tax reform, as it facilitates tax policy development by hosting hundreds of meetings, conferences, and workshops for the purpose of producing nonbinding norms around which nations can converge. But change also develops through international professional associations such as “IFA”—the International Fiscal

Association[10] a large and growing network of professional accountants and lawyers from all over the world who spend vast amounts of time and resources to attend, prepare reports for, or make presentations at conferences, meetings, and events organized around a wide array of tax topics. Similarly, the International Chamber of Commerce (ICC)[11]is a global network that facilitates participation of its membership in a wide array of international conferences, meetings, and events on technical tax matters. Many of the individuals involved in implementing the tax law in action are constantly engaged in the translation of all of the norms developed in these various international institutions.

Thus tax reform and change occurs as the law in action fails to achieve goals or expectations of tax lawmakers, as complexities or issues are introduced or developed by practitioners, academics, commentators, or other parties, and as lawmakers revise their goals or expectations.[12] Calls for reform animate a new lawmaking cycle in which new tax laws are written in the books, which in turn motivate a new cycle of implementation.[13] This process is repeated in response to evolving social, economic, and political impetus.

Those who create tax standards and rules and those who implement them thus may be conceptualized as nodes on the continuous cycle of tax reform. Individual actors who play key roles typically operate within local, national, and transnational professional settings, face multiple overlapping legal regimes, and have multi- faceted interests and agendas. Each individual works within various formal and informal networks, which overlap to various degrees in membership, goals, and activities.[14] Interests, activities, influence, and alignments of institutions and networks change as individuals and issues respond to dynamic social, political, and economic factors. These institutions and networks provide various forms of input and influence on the tax lawmaking process and on the process of implementation in different contexts and over time.

The result of all of these individuals and interactions is a pluralistic, iterative context for tax lawmaking that creates challenges for understanding the impetus, direction, and outcome of national tax reform efforts. In order to better understand how national tax policy evolves, we need a means of identifying the key participants, tracing their processes of information gathering, collaboration and decision making activities, and exploring the influence of the various institutions, individuals, and events on national tax policymaking.


Models of the pluralistic nature of lawmaking have been created in other legal fields, and may serve as instructive in the field of tax reform. For example, in their well-known work on the process of lawmaking in the area of corporate insolvency regimes, Terence Halliday and Bruce Carruthers express the agents and interrelationships that produce formal law and law in action as points of activity within a perpetual recursive loop.[15] The authors provide the following chart as a visual depiction of the key nodes of lawmaking in a global context:

Figure 1: Halliday & Carruthers: Recursive Cycling in Bankruptcy Law[16]


This model for corporate bankruptcy law serves as a valuable template for constructing a similar model for analyzing the recursive relationships in the field of tax policy. National tax lawmaking appears to conform closely the bankruptcy context, with iterative private/public collaboration and interaction in various degrees according to national customs and practices. The cycle of tax policy deliberation and drafting on the global stage involves a unique array of individuals and institutions that operate simultaneously in the national and international spheres. These individuals and institutions include the intergovernmental networks and international institutions that claim consensus on particular tax policy issue areas—such as the OECD, the International Monetary Fund(IMF), the United Nations (UN), the G-7, and other similar groups.17

The list of individuals and institutions that influence tax norm creation within global legal spaces also includes the lawyers, accountants, academics, and other professionals who act singly or in concert through international professional associations, as well as individual powerful sovereign states which may exert more direct influence on other global actors. Each of these arenas within the global pole of recursive cycling appear to be interlinked with the arenas that occupy the national pole, namely, the lawmakers and those who implement the law. Thus, a model for recursive cycling in tax policy might expand the global sphere and revise the national sphere as follows:

17 For a discussion of the OECD‟s central role in creating global tax policy consensus, see Christians, supra note 14; for a discussion of the complementary role of the G-20, see Christians supra note 8.

Figure 2: Model of Recursive Cycling in Tax Policy


Under this model, individuals interact with and within the regarding particular issue areas, and they respond to the identified issues both publicly (i.e., with reports, statements, articles, editorials, press releases and the like) and relatively more privately (such as within the protected spaces of international collaborative committees). In the national sphere, individuals may draw upon the collaborative outcomes they helped shape internationally, in order to try to influence domestic policy debates.

Having constructed a general model for conceptualizing the global context of national law making in the area of tax policy, we may begin to test it by considering whether it reflects events as they unfolded, on the ground, during specific national tax reform events. The following section draws on accounts of tax reform from three recent country-specific case studies, using the recursive cycling model as a framework for understanding how these examples illustrate the global context of national tax policy reform.


Three examples from case studies on national tax reform emerge as illustrative of the global nature of contemporary tax policymaking. Each is drawn from papers presented by the authors at a recent workshop that focused on comparing the evolution of tax systems in the post-World War II era in the key “emerging” nations of Brazil, China, and Turkey.[18] The first account is China‟s comprehensive tax policy reform of 1994, the second is Brazil‟s adoption of value added taxation in 1956, and the third is Turkey‟s adoption of value added taxation in 1980. Each of these accounts of tax reform is discussed in turn below.


China experienced a relatively recent shift to a contemporary tax system in the mid 1990s. The story of this major reform is a unique one involving extraordinary domestic political, social and economic transformation. It is also a story of the global nature of tax policy reform. Prof. Ruiquing Zhong traces the tax policy features of China‟s transition from centrally planned to market based economy in his working paper, “Tax Reforms and International Tax Norm Transmission: A Case Study of China‟s Tax Reform in 1994.”[19]

According to Prof. Zhong, China’s tax reform of 1994 was the final stage in a move toward a market based economy that began in 1978, a time he describes as “the period of progressive imitation of Western countries.[20] Prof. Zhong attributes China‟s contemporary tax system to a deliberate process of moving from progressive to comprehensive imitation of Western countries beginning in 1992.

He argues that this transformation took place because China‟s leaders determined in 1979 that the best path to economic prosperity after the devastating effects of the Cultural Revolution and adherence to Russian socialist principles was to embrace an American-style market economy.

Prof. Zhong argues that in shaping national fiscal reforms, China‟s tax reform was guided by a single scholarly report, entitled “Strengthening the Role of the Central Government in the Transition to a Market Economy: A Research Report on China‟s State Capacity.”[21]The report was authored by two academics, Wang Shaoguang, a professor of political science at Yale University, and Hu An‟gang, a researcher in the Chinese Academy of Sciences, who travelled to the United States to research and write with Wang.

Prof. Zhong states that via the Wang-Hu report, the United States tax system became “the benchmark for China’s [tax] reform.” Prof. Zhong suggests that the particular combination of these authors‟ personal and professional attributes created a unique sphere of influence that led China to adopt reforms specifically designed to mimic the tax systems of Western nations. These personal and professional attributes included strong ties to China through birth, family, and upbringing, affiliation with respected legal and educational institutions in the United States and China, and, in the case of Hu, elite access to popular media distribution channels.[22]

Professor Hu‟s own account of his reception in China on publishing his report is illustrative of this access:

“In May 1993, I returned to China and began to print the newest version of report on state capability of China. . .In the middle of June, I invited Dr. Wang Shaoguang report for the academics and the press in Beijing. I also introduced Dr. Wang Shaoguang to senior officials in treasury department and related departments of state council. Subsequently, the Xinhua News Agency, “People’s Daily”, China News Agency, “China Youth Daily”, “China Daily”, “Wen Hui Daily”, “China Business Times” reported summary views of the report; CCP Central Committee, State Council, The Standing Committee of the National People’s Congress, the CPPCC National Committee required me to send them the full report. In Hong Kong, “Wen Hui Daily”, “Economic Reporter”, “US Qiao Bao”, Agence France Presse report the views of the report. Chen Ning Yang is interested in such issues and requires me to send him a copy of the report. The strong impact and active response of the report exceed our expectations.”[23]

The combination of both authors‟ national and the international relationships and affiliations seem integral to their ability to influence the shape of tax policy transformation in China. As the authors state, “There port discussed not only the hot issues in the present economic and social life in China, but also the core issue about how China [can] succeed in the 21st Century. This topic is really very big, and difficult to deal with. As scholars [working] overseas, we serve our motherland by a special way, namely, by our independent and hard research, by our academic contribution. It should be said that the report represented our tough work, our feeling and a service to our motherland.”[24]

With additional research into the historical context of this reform, it might be possible to identify whether and to what effect competing viewpoints were offered by other academics or commentators (foreign, national, or similarly hybrid), as well as more detail about how this particular report drew the attention and support of the political leadership and media when it did. But even within this brief account, the international nature of China‟s tax academics and the irremarkable influence over the speed and direction of tax reform in China demonstrates the importance of the role of international academics in transmitting and translating tax policy norms. These academics served as effective nodes of international norm translation and transmission, uniquely shaped by the national context, as illustrated in recursive cycle modeled above in Figure 2.


Unlike China‟s experience with tax reform, which arose in a particular time and place that was unique in its intersection of social, political, and economic forces, tax reform involving value added taxation is a global trend. As is widely documented in the tax literature, developed and developing countries around the world have broadly embraced value added taxation as a major revenue raising mechanism, especially over the past two decades. According to the

OECD, value added taxation “has now been implemented by nearly 150 countries, where it often accounts for one fifth of total tax revenue.”[25]Thus value added taxation is a multi-state phenomenon that lends itself readily to comparative historical review.

The trend towards value added taxation is “closely associated with” the activities of the International Monetary Fund (IMF), especially in developing countries, where the tax has most often been adopted in compliance with structural adjustment programs.[26] As a result, the traditional story of the spread of value added taxation involves a narrative about the IMF‟s insistence on adoption of this tax as a condition for financial assistance. The IMF‟s focus on value added taxation specifically, as opposed to other competing forms of taxation, is generally attributed to its intellectual, technical, and even scientific grounding. The value added tax is typically associated with economic efficiency and suitability for raising revenues while fostering growth in the context of a highly competitive global economy.[27 ] Support is of course not universal: conventional scholarly responses to value added taxation include much criticism of its regressive distributional effect and the issue of legitimacy when tax reform is imposed exogenously and, in the view of many of its critics, coercively, through the IMF‟s conditional lending programs.[28]

The connection of the value added tax to the IMF is well documented, but its origins are less well-known. The tax was initially conceived and implemented as a result of academic study that originated in Germany and quickly reached an international audience, although Germany itself did not adopt the tax until it was endorsed by the European Economic Community. Though clearly not a member of the Community, Brazil was an original audience for this report, and it became the second country in the world to adopt value added taxation when it did so in 1956, following France.

Professors Misabel Abreu Machado Derzi and Andre Mendes Moreira explore the historical development of Brazil‟s adoption of value added taxation in their paper, “Tax Reform and International Tax Norm Transmission, Case Study of Brazil: Value-Added Taxes.”[29] In this paper, the authors demonstrate the international intellectual efforts that led Brazil to sign on to what was then a new and untested concept in taxation.

As Profs.Derzi and Moreira point out, Brazil‟s adoption of value added taxation at such an early date seems to preclude much analysis of a global context. First, at the time of Brazil‟s adoption, France was the only other country with a value added tax system in place. Second, Brazil‟s adoption preceded the European Economic Community‟s vote on the adoption of a single value added tax system, which did not occur until 1967. Finally, value added taxationwas not yet a subject of inquiry or study by the IMF or the OECD, so there was no particular institutional support for this form of tax.

Consequently, Derzi and Moreira conclude that Brazil‟s initial adoption of the tax must have been as a result of French influence, which, the authors state, “would be consolidated in the following decades.” According to the authors‟ account, Brazil and France shared a close connection at this point in time.

Further study into this relationship would help explain the path of tax norm transmission between the two countries.

As Profs. Derziand Moreirastate, France‟s own adoption of value added taxation was likely connected to a proposal by Von Siemens to the German government in 1918. Of course, the geographic proximity of France and Germany is likely a primary aspect of the transmission of ideas between these two countries, but further study on this report, and the connection between Brazil and France at the time, might help bring to light the individuals and institutions that led Brazil to adopt value added taxation when it did.

Profs. Derzi and Moreira‟s account of the subsequent reform of Brazil‟s value added tax raises some more specific details about the international dimension to this form of taxation, even in its early adoption stage. The professors focus especially on the influence of two reports as Brazil reformed its value added tax as part of constitutional reform in 1962. Both of these reports involved foreign scholars of tax law, namely, Fritz Neumark of Germany and Carl S. Shoup of the United States, whose influence on taxation in developing countries is extensive and well-represented in the American academic literature.

The first report was the now-famous (in value added tax circles, at least) Neumark Report of 1962, which was a product of a study designed to develop uniform tax practices in the European Common Market countries.[30]Profs. Derzi and Moreira state that the Neumark committee “was composed of distinguished experts, all university-level professors, chaired by Prof. Fritz Neumark,from Frankfurt, who was also rapporteur [and] Prof. Carl S. Shoup from NewYork.” The Neumark report recommended that the Common Market countries adopt value added taxation on the grounds that his form of taxation would foster the free movement of goods and services in keeping with the goal of the Treaty of Rome.

The second report was that of Carl S. Shoup in his capacity as a consultant to the Brazilian Finance Ministry‟s Tax Reform Committee. The Shoup Report was published in 1965 and recommend a series of technical reforms to streamline the tax and extend it to certain services.[31] As Profs. Derzi and Moreira point out, not all of Shoup‟s recommendations were adopted by Brazil, and, according to their account, it appears that Prof. Shoup was himself somewhat confused in some respects with respect to the actual content and workings of Brazil‟s pre-existing value added tax system. Nevertheless, his recommendations were taken seriously and he is attributed with tax reform efforts in Brazil as well as many other countries. Profs. Derziand Moreira‟s account suggests that while the academic reports written by Neumark and Shoup (in 1962 and 1965, respectively) were obviously irrelevant to Brazils‟ adoption of value added taxation in 1956, these reports did serve a valuable function, by persuading the Brazilian states to adopt constitutional reform and thereby shift away from their existing status quo of cascading turnover taxes to the new, federal form of value added taxation.

The paper suggests that a sense of Brazil‟s social or political connection to the European Community is of central importance to Brazil‟s decision to adopt value added taxation and later to justify its constitutionalism. Additional historical research regarding the social and political context of these reforms might provide greater insights into why the foreign-originated reports were particularly valuable as opposed to other sources of institutional, academic, or political support. Additional study of the relationship between Carl Shoup and the Brazilian government, as well as among the Brazilian and European lawmakers, academics, and other key individuals would be useful to flesh out this global context for tax reform in Brazil.


Unlike Brazil‟s status as an early adopter of value added taxation, Turkey‟s experience with this tax more closely follows the typical narrative of IMF-led tax reform. The unique social and political context of Turkey‟s adoption of the tax provides a complementary dimension to the conventional story. In a paper entitled “Democratic Legitimacy of Tax Reform in Developing Countries: The Case of Turkey,” research on Turkish tax reform in the post-World War II era by Prof. Leyla Ates reveals a story about the international political opportunism involved in the adoption of value added taxation in that country.[32] Turkey‟s experience of tax reform features a central role for major national political events, coupled with influence from the international financial community, in bringing about planned tax reforms.

In the case of value added taxation, as well as in connection with other tax reforms, Prof. Ates demonstrates that unpopular tax reform proposals, especially a value added tax scheme, were defeated in Turkey during times of democratic governance only to be quickly enacted upon a drastic change in the power structure through military coup. Prof. Ates notes that value added taxation had long been recommended to Turkey by several tax experts, including the above- mentioned Carl S. Shoup as well as Leif Muten from the IMF, but it was only in the immediate wake of military coup that the political will was suddenly mustered to adopt it. As a legal and political matter, Turkey‟s value added tax regime was perceived as a product of a “guided democracy” because the post-coup parliament that adopted it had banned opposition parties from participating in the election and placed curbs on a wide array of political speech.

The international context of Turkey‟s tax reform, like the accounts from China and Brazil discussed above, demonstrates the importance of the mechanisms and processes of global tax norm development. As Prof. Ates describes, Turkey‟s then president, Süleyman Demirel, contacted the IMF after forming his government in 1979. An IMF team visited Turkey, after which Demirel sent Özal to the IMF‟s offices in Washington, D.C., to discuss the outlines of his new stabilization program and a new stand-by agreement. After Özal returned from the United States, he assembled a team and prepared a program that was accepted and announced by the new, post-coup government in 1980. Professor Ates describes Ozal‟s proposed program as a major transformation for the Turkish economic system, “with particular emphasis on liberalization and de- regulation,” and “a radical departure from economic policies pursued by Turkey over the last two decades.”[33]

According to Ates‟ account, Ozal‟s affiliation with the extremely influential Turkish business association, TÜSİAD, coupled with his experience in representing Turkey in the IMF negotiations, gave Ozal a unique central role in shaping Turkey‟s tax reform. Specifically, Ozal was an employee of one of the members of TÜSİAD during a time in which the organization was engaged in advocating “the modification of economic policies in a liberal and outward-oriented direction.” Ates states that members of the TÜSİAD had personal and professional relationships with individuals in the IMF, the World Bank, the United States administration, and the American private banking community.

As Prof. Ates notes, Ozal’s prescriptions were not politically acceptable in Turkey’s democratic government in the period before the coup. Yet, immediately following the coup, the program was put in place. As one commentator noted, “Even [though] key ministers had been unaware of the scope of the plan outside their own domain, they were asked to sign a variety of decrees on a piecemeal basis and had no advance information as to what other components of the program would be.”[34]Some scholars attributed the sequence of events to “bureaucrats” who persuaded the military authority to adopt Ozal’s proposal.[35] One of Turkey’s cabinet ministers confirmed this persuasive effort, stating that “The Demirel government had been able to enact none of the tax laws which had been foreseen in the economic stabilization program…[X] explained the generals that the legislation of new tax laws was absolutely necessary in order to go on with the stabilization program and to balance the oncoming budget. They listened carefully. They accepted. They were reasonable men.” [36]

Prof. Ates‟ account suggests that adoption of value added taxation in Turkey was the result of a complex interrelationship between a national expert with international ties (Ozal), experts from the international financial institutions and especially the United States, and a number of national bureaucrats who kept a plan in progress despite the national crisis of military coup. Further study of these diverse agents of change might further reveal the key relationships between national and international individuals that successfully implemented a specific path of tax reform, but the critical importance of a juncture between national and international forces is clear even from this brief description of Turkey‟s experience with value added taxation.

Tax and economics experts, academics, politicians, and bureaucrats were clearly necessary to the tax reform experiences discussed above in the cases of China, Brazil, and Turkey. In each case, the specific path of tax reform was unique and unlikely to be repeated elsewhere in the world: certainly, the political, social, and economic circumstances of each moment of tax reform are distinguishable in most respects. Nevertheless, the accounts of these experiences feature some key common characteristics and the reforms themselves share some similar outcomes, as discussed in the following section.


The three accounts of tax reform discussed above involve three very different national experiences, with distinct contextual circumstances. Yet there are common features in the three examples of tax reform. Foremost among these common features is that none of the reforms could be described as purely domestic in scope. Clearly, none of the reforms was the product of solitary rumination and study by a national legislature, on the basis of solely national interests or input from solely local constituents and experts. Instead, each instance of reform was the product of a relationship between national lawmakers and foreign or quasi-foreign individuals, international institutions, and internationally important events. Each reform was uniquely forged out of these national/global relationships. It is perhaps not surprising therefore that the specific relationships share common elements that were ultimately critical to passage of particular forms of tax reform, and that the outcome of the reforms have shared some key characteristics. This section considers some of these common elements and outcomes in turn.


First, individual credibility appears to be a key for successfully transmitting global norms into national practice. That is, in each reform, central actors were individuals with prestigious credentials and affiliation with elite academic institutions. We can certainly see the influence of American educational institutions in tax reform around the world: in China, we see the reach of Cornell University and Yale University;[37]in Brazil and Turkey, other Ivy League Schools including Stanford and Columbia are represented.[38] Germany‟s University of Frankfurt is similarly represented in Brazil and Turkey. It is worth considering these credentials in thinking about what sort of expertise is considered sufficient to provide the necessary credibility to form part of a global context of tax reform.

For example, Carl Shoup, a central figure in the Brazilian and to some degree in the Turkish tax history (as well as in a number of other countries) held a law degree from Stanford University and a PhD in economics from Columbia University, where he was a full professor and chair of the Economics Department. At Columbia, he was closely associated with other well-known tax experts including Edwin Seligman and Robert Murray Haig. On the strength of these impressive credentials, as Prof. Ates suggests, Shoup needed only three weeks to determine a necessary path for tax reform in that country. Shoup‟s relatively minimal need for field research is to be contrasted with the years of study and effort by Turgut Ozal,who himself had international ties as an employee at the World Bank, and Fritz Neumark, who not only learned Turkish but became a Turkish citizen and lived and worked in Turkey for over twenty years.[39] Fritz Neumark was similarly well-credentialed academic, having affiliations with the University of Frankfurt as a professor and later Chancellor.

These impressive credentials are probably necessary but also likely insufficient requirements for effecting tax policy reform in foreign countries. In addition to possessing academic credentials, it appears that the individuals who successfully influenced tax policy in the three accounts considered herein were also characterized by their political effectiveness. For example, both Professor Hu, in the case of China, and Turgut Ozal, in the case of Turkey, successfully navigated the complex political landscape of the irrespective nations‟ turn toward a free market society, in each case at least in part due to pre-existing political connections. Professor Hunot only knew a bout the social and political history that led to and necessitated reform in China, so his expertise was context-specific, he also knew how to access the political leadership with his academic work. As Prof. Zhong‟s account shows, he accomplished this with pre-existing media and political network ties. Turgut Ozal‟s strong ties to the Turkish business community and the international financial institutions provided him a similar access in Turkey.

In Profs. Derzi and Moreira‟s account, Neumark and Shoup‟s influence in justifying the constitutionalism of the value added tax is clearly important. However, it is the earlier adoption of the value added tax that raises questions about the connection between the national and the international—clearly, Brazil had ties to Europe, and especially France, that facilitated the transmission of the tax overseas.

More research into the influence of the Von Siemens report in Germany and the political and social ties between Brazil and France at the time might help reveal the key individuals who served as transmitters and translators of the tax in Brazil.

Drawing inferentially from the tax reform accounts presented in the papers discussed here, access to financial and political resources, as well as elite academic credentials, appear to be equally necessary elements for tax policy norm transmission. It is perhaps not surprising that these attributes are associated with the ability to influence politics, but it is worth considering whether these attributes are also associated with a certain kind of tax policy outcome.


The dual inquiries into which individuals and institutions matter from the perspective of global tax policy, and how such individuals and institutions go about in effecting norm transmission, raises questions about the substantive outcome of the global evolution of tax policy. While there is no global body enforcing the implementation by sovereign states of particular forms of taxation, it is nevertheless the case that there are a number of broad global tax trends that have brought societies to a certain distributional status quo. The events, individuals and institutions described above as agents of change have created a unique imprint on the tax systems of the world. It is worth considering whether and how tax systems might differ under different agents of change.

Specifically, the dominant features of contemporary tax systems include an increasing burden on wages and consumption, and a diminishing burden on capital.[40] These features may also be roughly described as comprising an increasing burden on the poor, working, and middle classes, and a diminishing burden on the wealthiest members of society, including artificial (corporate) persons.[41] One possible conclusion that may be drawn is that society’s financial elites have done a good job, over time and across the globe, in protecting their financial interests throughout numerous iterations of tax policy reform in a broad mix of circumstances. If this is true, it is also possible that different agents of change would produce a vastly different global tax status quo.

In considering tax policy from this perspective, the process of norm creation and development, including the decisions about whose opinion and expertise is consulted and how power is shared among individuals across nations, is obviously of vital importance. We should begin to ask questions about whether particular national, academic, or political connections and affiliations ought to color perceptions of expertise as they apparently have in the past, and whether nationally-cultivated expertise, even if less internationally influential, ought to command greater attention.

In addition to the question of deference to expertise, the analysis of how individuals transmit and translate tax norms raises questions about the costs of pursuing global tax trends. As I have explored in prior work, tax policy choices create opportunity costs, especially for lower income countries, in that governments must allocate finite resources toward one form of taxation to the exclusion of others. For example, because of the IMF‟s long-term intellectual development of value added taxation as a treasured concept, technical assistance may be made available primarily or only to support this tax policy strategy, regardless of the degree to which it is popularly conceptualized in the domestic sphere.42A major challenge for the recipients of this kind of outside expertise is that while the experts may be able to learn from and change their prescriptions based on experience across countries, the countries themselves may not be able to adapt their legal systems easily, especially after pushing through prior, often unpopular, reforms.43 As one well-regarded economist notes, “No one keeps count of the opposition politicians who promise to remove a VAT if elected but then find that, unfortunately, circumstances prevent their doing so just yet.”44

The academics, legal practitioners, think tanks, and politicians described above, and hundreds of their counterparts around the

world, have both contributed and responded to the global tax policy status quo, using a mix of academic, political, and popular influence. These individuals and institutions form an important, if under- analyzed, global context for national tax reform. By studying this context, we may better understand how contemporary tax policies evolved, as well as identify and meet the ongoing challenges faced by national tax systems.


Governments have long revised, revisited, and reformed their tax regimes in response to economic, social, and political forces, and we should expect more revision and reformation in the future, as contoured by the various challenges presented by economic globalization. International events, institutions, and individuals have long been contributors to national tax reform, though their central importance is perhaps increasing and changing, and they are becoming subject to more attention and scrutiny from those outside the direct process of lawmaking.

As the accounts of national tax reform discussed here demonstrate, political, social, and economic relationships among states, institutions, and individuals significantly impact the types of tax norms that arise internationally and take root nationally. We may better understand how contemporary tax politics take shape by examining national tax reforms in the context of this ongoing global evolution. Analyzing the characteristics of both tax reform processes and those who impact tax reform both domestically and internationally, may help to generate useful discussion and debate about the trends of global tax policy more generally.

[1]Assistant Professor, University of Wisconsin Law School; J.D., Columbia University School of Law.

[2] See Allison Christians, Networks, Norms, and National Tax Policy, 9 Wash. U.

Global Studies L. Rev 1 (2010).

[3] See,e.g., TerenceC.Halliday&BruceG.Carruthers,TheRecursivityofLaw:

Global Norm Making and National Lawmaking in the Globalization of Corporate

Insolvency Regimes, 112 Am. J. Soc. 1135 (2007) (charting a bi‐level arena of law‐making in which various actors interact and exert influence at different

stages of legal reform and development).

[4] See University of Wisconsin International Tax Workshop: Networks, Norms, and the Transnationalization of Tax Lawmaking, April 29, 2010, https://www.wage.wisc.edu/events/?ID=691 (last visited July 1, 2010). The papers prepared for that workshop are currently in draft form, available on file with the author.

[5] Halliday & Carruthers supra note 3.

[6] For these purposes, “tax law on the books” is identifiable by virtue of its association with traditional law making authority, through national legislative, executive, and judicial processes.

[7] Many describe the identification process as that between tax avoidance and tax evasion. See, e.g., Menahem Pasternak and Cristophe Rico, Tax Interpretation, Planning, and Avoidance: Some Linguistic Analysis, 23 Akron Tax J. 33 (2008); Joel Slemrod & Shlomo Yitzhaki, Tax Avoidance, Evasion, and Administration, in 3 HANDBOOK OF PUB. ECON. 1423, 1428 (2002); Joel Slemrod, A General Model of the Behavioral Response to Taxation, 8 Int’l Tax & Pub. Fin. 119 (2001); MICHAEL BROOKS & JOHN HEAD, TAX AVOIDANCE AND THE RULE OF LAW (Graeme S. Cooper ed., 1997).

[8] Some recent examples in United States jurisprudence involve the recent codification of the economic substance doctrine and the current attention to global tax evasion through tax havens. For a discussion of the former, see, e.g., Joseph Bankman, The Economic Substance Doctrine, 74 S. CAL. L. REV. 5, 7-12 (2000); Alexandra M. Walsh, Formally Legal, Probably Wrong: Corporate Tax Shelters, Practical Reason and the New Textualism, 53 STAN. L. REV. 1541, 1544 (2001). The latter, as I argue in prior work, was tacitly accepted and ignored by governments for a long time before suddenly becoming a global priority when certain national leaders raised it as an issue for study by the OECD. See Allison Christians, Taxation in a Time of Crisis: Policy Leadership from the OECD to

theG20,5 NWJ.L.&SOC.POL‟Y19(2010).

[9] International law scholars use the term “softlaw”to describe norms that may not themselves constitute law but seem to have effects that evoke a legal process or form because they compel a law-like sense of obligation in states. See, e.g., Christine Chinkin, The Challenge of Soft Law: Development and Change in International Law, 38 INT‟L & COMP. L.Q. 850 (1989); David M. Trubek, PatrickCottrell&MarkNance,‘SoftLaw’,‘HardLaw’,andEUIntegration,in NEW GOVERNANCE AND CONSTITUTIONALISM IN EUROPE AND THE UNITED STATES, (Joanne Scott & Gráinne De Búrca eds., 2005) (suggesting that a hybrid approach, seeking both hard and soft elements, is needed in analyzing issues of international law). For a discussion regarding the use of the term in the context of tax policy, see Allison Christians, Hard Law, Soft Law, and International Taxation, 25 WISC. INT‟L L.J. 325 (2007).

[10] International Fiscal Association, What is the IFA?, https://www.ifa.nl/index.htm (last visited June 25, 2010) (describing IFA as “the only non-governmental and non-sectoral international organisation dealing with fiscal matters,” whose “objects are the study and advancement of international and comparative law in regard to public finance, specifically international and comparative fiscal law and the financial and economic aspects of taxation”).

[11] Indeed, the acronym “ICC” is as likely to evoke the International Criminal Court as the International Chamber of Commerce, though the latter has existed for a century longer. See International Chamber of Commerce, What is ICC? https://www.iccwbo.org/id93/index.html (last visited July 25, 2009) (describing the ICC as “the voice of world business championing the global economy as a force for economic growth, job creation and prosperity”).

[12]Forexample,becausenewprioritiesareassertedthroughpoliticalorsocial movements.

[13] This is evidenced in the United States in particular, where an informal counting produced a figure of more than 1,300 tax law changes over seven years, prompting the author to conclude that “nothing beats the IRC for congressional tinkering.” See David Zaring, The Most Amended Statutes in America (July 8, 2008) at https://www.theconglomerate.org/2008/07/the-most-amende.html?cid=121547138#comment-121547138 (counting some 1,331changestotheU.S.taxcodefrom2001to2008). Some congressional tinkering with the tax system may constitute new initiatives and policies introduced by individual members of Congress, while much reform is in response to issues that are raised by those within the private and public sectors who implement the existing rules.

[14] Allison Christians, Sovereignty, Taxation and Social Contract, 81 Minn. J. Int’l L. (2009).

[15]Halliday & Carruthers supra note 2.

[16]Halliday & Carruthers supra at 1147.

[18]See supra note 4.

[19] Onfilewiththeauthor.Prof.ZhongexplainsthatChina‟spostWorld-WarII experience began with a large-scale civil war in which the prevailing Communistpartyeliminatedtheentireexistinglegalsysteminordertocreatea centrally planned economy featuring government ownership of all key industrial and commercial property and enterprises. During this period, national revenue was raised not by taxation but through such state ownership. From the1950sthrough1994,China‟sfinancial history thus involved a constant struggle for control over production and its attendant revenue between the central and local governments. Prof. Zhong notes that it was “impossible to find the right balance in dealing with the relationship between central government and local government under the condition of state ownership of enterprises and planned economy,” and suggests that tax reform was inevitable as a result of this disequilibrium.

[20] This brief description of Prof. Zhong‟s research is necessarily oversimplified yet illustrative of China‟s participation in the general global trend toward income and consumption taxation.

[21] Wa.ngShaoguangandHuAn‟gang,Jiaqiangzhongyangzhenfuzaishichang jingjizhuanxingzhongdezhuadaozuoyong-guanyuZhongguoguojianengli de yanjiu baogao, 1993, mimeo.

[22] Prof.Zhongdocumentssomeoftheseaspectsinhispaper;seealsoPakK.

Lee, Into the Trap of Strengthening State Capacity: China’s Tax-Assignment Reform, 164

CHINAQUARTERLY1007(2000)(describing Hu‟s access to media).

[23] Wang Shaoguang and Hu Angang, The report on State Capability of China, Liaoning People Press, 1993, pp.285, cited and translated in Zhong, supra note19.

[24] Id.

[25] OECD, Consumption tax, at https://www.oecd.org/department/0,3355,en_2649_33739_1_1_1_1_1,00.htm

l (lastvisitedJuly1,2010).

[26] Keen at 160; see also Stewart supra note 5; Richard M. Bird & Pierre-Pascal Gendron, The VAT in Developing and Transitional Countries (New York: Cambridge University Press, 2007) at 16 (the IMF has “been the leading „change agent‟ in tax policy in many developing and transitional countries”);

Christopher Heady, “Taxation Policy in Low-Income Countries” UNU WIDER Discussion Paper No. 2001/81 (2001), online: UNU WIDER <https://www.wider.unu.edu/publications/working-papers/discussion- papers/2001/en_GB/dp2001-81/> (IMF programs “have been a major force in determining the direction of tax reforms in low-income countries”); Thomas Baunsgaard & Michael Keen, “Tax Revenue and (or?) Trade Liberalization” IMF Working Paper #05/112 (2005), online IMF <https://www.imf.org/external/pubs/ft/wp/2005/wp05112.pdf >.

[27] See e.g. World Bank, World Development Report 2006: Equity and Development

(Washington, D.C.: Oxford University Press, 2006) at 12, 176-177; Heady, supra note 60 at 5 (“Any lost revenue from reducing trade taxes must be balanced by increases in tax revenues elsewhere. A common recommendation is to increase the revenue from domestic commodity taxes, which are less distortionary than trade taxes.”).

[28] Foracomprehensivestudy,seeMirandaStewart,GlobalTrajectoriesofTax Reform: The Discourse of Tax Reform in Developing and Transition Countries, 44 Harv. Int’l L.J. 139 (2003).

[29] Draft on file with the author.

[30] Report of the Fiscal and Financial Committee, in The EEC Reports on Tax Harmonization (Amsterdam: International Bureau of Fiscal Documentation, 1963).

[31] Carl Summer Shoup, The Tax System of Brazil (Rio de Janeiro: Fundação Getúlio Vargas, 1965).

[32]Paper on file with the author.

[33] Ozal had previously served in the Turkish State Planning Organization, the World Bank, the Turkish Industrialists‟ and Businessmen‟s Association, as

President of the Metal Industrializations Union, and as a top-level executive in a Turkish holding company. Ates supra note 32.

[34] AnnaO. Krueger,PartialAdjustmentand Growthin the 1980sin Turkey,in

REFORM, RECOVERY, AND GROWTH: LATIN AMERICA AND MIDDLE EAST 351 (Rudiger Dornbusch & Sebestian Edwards eds., 1995).

[35] “In the early 1980s, the military government introduced a plethora of tax changes that depended for the most part on the ability of government bureaucrats to gain access to the inner power circle and persuade the military authoritiestoadopttheirideas.”SeeBulutoğlu&Thirskat367.

[36] Krueger & Turan at 361 (citing an interview with a minister who served in the first cabinet established by the military leadership in September 1980).

[37] Professor Shaoguang Wang, who co-authored the key academic support for tax reform in China, holds a PhD in political science from Cornell and was a professor at Yale University at the time of the report; he is currently a chaired professor at the Chinese University of Hong Kong and Tsinghua University. See Shaoguang Wang, https://www.cuhk.edu.hk/gpa/wang_files/BIO.htm (last visited July 1, 2010).

[38] Carl S. Shoup, who featured in tax reform in both Brazil and Turkey, was a graduate of Stanford and Columbia Universities.

[39] See, e.g., F. Andic and A. Reisman, Migration and transfer of knowledge: Refugees from nazism and Turkish legal reform, Forum historiae iuris (2007), available at https://www.rewi.hu-berlin.de/online/fhi/articles/pdf- files/0707andic_reisman.pdf.

[40] See, e.g., Reuven S. Avi-Yonah, Globalization, Tax Competition, and the Fiscal

Crisis of the Welfare State, 113 Harv. L. Rev. 1573 (2000).

[41] The distribution is exacerbated by the ability of wealthy persons, natural and artificial, to avoid taxation through “legitimate” tax planning as well as through less sanctioned means.

[42] For example, in documentation regarding fiscal assistance it was requesting from the IMF, the Federal Islamic Republic of Comoros noted that it was able to significantly expand indirect taxation owing to technical assistance it received from this institution. IMF, Union of the Comoros: Staff-Monitored Program: Letter of Intent and Memorandum of Economic and Financial Policies (31 March 2006), online: IMF <https://www.imf.org/external/np/loi/2006/com/033106.pdf>.

[43] See e.g.ScottBasinger&MarkHallerberg,“Internationalization and Changes in

Tax Policy in OECD Countries: The Importance of Domestic Veto Players”

(1998) 31 Comparative Political Studies 321; Scott Basinger & Mark Hallerberg, “Competing for Capital: The Effects of Veto Players, Partisanship, and Competing Countries‟ Domestic Politics on Tax Reform” (2004) 98 AmericanPoliticalScienceReview261.

[44] Keen at 167.

Previously published by the University of Wisconsin – Law School, 2010


Sumário: 1. Introduction; 2. The Global Context of Tax Policy: Structure and Scope: A. Formal law versus Law in Action; B. An Analytical Model of Lawmaking: Recursivity in Corporate Insolvency Regimes; 3. Global Context of National Tax Reform: Three Accounts: A. China: Comprehensive Tax reform, 1994; B. Brazil: Early VAT Adoption, 1958; C. Turkey: Late VAT Adoption, 1980; 4. National/Global Tax Reform: Key Characteristics and Need for Further Study: A. Examining the Agents of Tax Reform: Some Key Features; B. Tax Reform Outcomes: Some Common Themes; 5. Conclusion.


To top