City Research Online

Abstract

Corporate tax avoidance is both widespread and diverse in its practical mechanics. The scope of the phenomenon often leads economists to conclude that in the jungle of economic competition, tax planning (or optimisation) is among the necessary tools to ensure the survival of the fittest. This theory is increasingly associated with a Darwinian theory of economic evolution. In this paper, I develop a contrasting framework of the evolutionary political economy of corporate tax avoidance. Analysing core concepts of Old Institutionalist Economics (OIE), I examine the core drivers of corporate tax avoidance in a globalised system of states. The major contrast, I find, is between that of the corporate and legal personality and the institutional environment in which it operates. Historically, each corporate entity has been considered a separate legal person, yet a series of ‘mutations’ of incorporations laws created a widening gap between theory and reality, and these, in turn, give rise to tax arbitrage. Narrowing this gap, however, impinges on another venerable historical institution, the institution of sovereignty and sovereign inequality.

Publication Type:	Article
Publisher Keywords:	Old institutional economics, Tax avoidance, Multinational enterprise, Evolutionary theory, Sovereignty
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HJ Public Finance J Political Science > JA Political science (General) J Political Science > JC Political theory
Departments:	School of Policy & Global Affairs > International Politics
SWORD Depositor:	Symplectic Administrator

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