Fairness in International Taxation: The Ability-to-Pay Case for Taxing Worldwide Income

Copyright © 2001 by J. Clifton Fleming, Jr., Robert Peroni & Stephen E. Shay. All rights reserved.The ability-to-pay fairness concept is a key factor underlying the historic U.S. policy of relying principally on income tax to finance federal government expenditures. Indeed major justification for this reliance, as opposed significant dependence consumption levies, that system spreading costs in way advances giving substantial deference comparative ability-to-pay.Consequently, one would expect analysts routinely examine equity implications international rules applying criterion with same rigor domestic context. But surprisingly, there has been relatively little discussion literature regarding role analyzing issues. This may be because composition investment historically dominated direct foreign investments multinational corporations, which pose perplexing issues evaluating concerns. Even if true, however, an inadequate reason forego analysis considerations when scrutinizing important dimension modern tax. In article, we concerns, embedded abilityto-pay concept, play justifying taxing residents their worldwide incomes.