Foreign Policy of the European Union—Assessing Europe’s Role in the World sets out to treat the foreign relations of the EU in a holistic, all-encompassing manner. For this purpose the book is divided into five parts, each of which develops a different perspective on the EU’s external actions.
By: Professor Burt Neuborne [*]
The hope that the ATS would permit entrepreneurial lawyers to choreograph international human rights cases involving: (1) alien plaintiffs; (2) alien corporate defendants; and (3) acts wholly occurring abroad into an American court in an effort to take advantage of American discovery rules, Rule 23 class actions, and an independent judiciary is now history. All nine Justices in Kiobel slammed that door, which was probably a pipe dream in the first place. Chief Justice Roberts, writing for five Justices, including the maddeningly vague Justice Kennedy, ruled that the presumption against extraterritorial legislation blocked use of the ATS as a source of federal jurisdiction when neither the plaintiffs, nor the defendants, nor the operative facts had a significant link with the territorial United States. Mere corporate presence for the purposes of general jurisdiction over the defendant could not, ruled the Chief Justice, constitute the significant link to the territorial United States needed to rebut the presumption against extraterritorial legislation.
This morning, the Supreme Court dismissed the human rights claims of a group of Nigerian nationals against Royal Dutch Petroleum (Shell) under the Alien Tort Statute (A.T.S.) in a 9–0 decision, though the justices split 5–4 as to the reasoning. For the original opinion, see: Kiobel v. Royal Dutch Petroleum Co., 569 U.S. ___ (2013)
Justice Roberts delivered the opinion of the Court on behalf of 5 justices. First, the Court held that the presumption against extraterritoriality, explained with force in Morrison v. National Australia Bank, 561 U.S. ___ (2010), applies to the statute and the federal common law cause of action under the statute. Second, the court found nothing in the statute’s language or history to rebut the presumption. Third, there are no facts to rebut the presumption in the instant case. Fourth and finally, the Court justifies its solution as preventing the ‘diplomatic strife’ that may arise from judicial interference in foreign policy, an area that is traditionally reserved to the political branches. The Court implied that even if the primary norm that created the cause of action might not cause strife, the judicial search for secondary rules (such as corporate liability) may still do so.
China vetoing a February 2012 UN Security Council resolution. China’s engagement with the UN Security Council has received close attention since its veto of UN action in Syria in February 2012. Some commentators have argued that this veto signals the…
Taxes not only serve to raise public revenues but also to shape the behavior of taxpayers, and thus of the economy as a whole. The tax neutrality of Adam Smith is, therefore, the most hypocritical aspiration of any tax policy. Importantly, governments today not only seek to shape the behavior of its residents, but also of the foreigners who interact with the country—thereby transforming the territoriality of tax jurisdiction into another hypocrisy. And the effects of this phenomenon have an increasing impact on international politics, as well as certain trade policies did in other not so far times.
On October 26, 2011, the Committee on Ways and Means of the U.S. House of Representatives issued a discussion draft for a “comprehensive tax reform” of the U.S. international taxation system. The issuance’s purpose is to seek feedback from interested professionals and stakeholders in order to improve the proposal. And this proposal, usually called “The Camp Tax/Territorial Proposal” due to the fact that Congressman Dave Camp presides the Committee on Ways and Means, is very important to be ignored. This reform, in fact, posits a modification that we could consider a kind of “revolution” in the U.S. income tax system. It proposes a change from a “worldwide tax system” to a “territorial tax system,” and offers a reduction of the corporate tax rate (from 35% to 25%) and, as an accompanying and instrumental benefit, a “repatriation tax holidays.”
In a few words, a worldwide tax system (also know as residence-based tax system) imposes taxes on any income regardless its physical origin (source), both domestic and foreign. Instead, a territorial system only taxes the domestic (residence) source income while exempting the foreign one. In both scenarios, the income is typically taxed first in its source country and, in a cross-border arrangement, afterwards in the taxpayer’s residence country. So, to alleviate the contingent double taxation, the worldwide system grants a credit for foreign taxes paid (the so-called “foreign tax credit,” which operates as an advance of domestic taxes) whereas the territorial system simple exempts the foreign source income. Also, in a worldwide system such as the U.S. system, taxation on foreign income derived from business (“active income”) is normally deferred until brought to the U.S. (“repatriation”) whereas foreign income derived from investments (“passive income”) is generally taxed as soon as it is earned through a number of quite complex mechanisms, such as the U.S. Subpart F rules (Controlled Foreign Corporations or “CFC”) and others. The accompanying benefit to this reform, the “repatriation tax holidays,” attempts precisely to incentive U.S. investors to rapidly repatriate their active income earned abroad through a very appealing tax treatment, which consists basically in a reduced tax rate along with a comfortable installment period to pay the taxes (for details, click here).
Although at a first sight (and as many are today arguing), this reform would favor allocating of U.S. investments abroad through exempting foreign source income, a more thoughtful consideration reveals the contrary. Importantly, the first goal at hand is to repatriate U.S. investments currently invested abroad, and that is actually an objective with empirical support from the experience of other countries which have implemented a territorial tax system such as The Netherlands and notably, the U.K. (for further information, see links below). On the other hand, nothing in this proposal indicates that the Committee on Ways and Means attempts to decrease the U.S. revenues by exempting foreign source income that, as argued, would be generated by U.S. investments that would move abroad by virtue of this reform. To the opposite, the reform also aims to increase the U.S. tax revenues just as it has happened in The Netherlands and U.K. So, this policy has actually worked so far. Consequently, we may conclude that the proposed reform assumes that, in the long-term, the income generated by U.S. investments will then be produced only in the U.S. and not abroad. Why?