The Panama Papers are front-page news around the world and nowhere more so than in the UK, where the tax arrangement’s of David Cameron’s family are facing intense public scrutiny (see here, here, and here). The international furore over the Panama Papers revelations follows many months of debates about international taxation, particularly the taxation of multinational firms such as Google.
At such a time, it is helpful to put contemporary debates about tax havens and cross-border tax strategies into a business-historical perspective. Luckily, a recent paper by Simon Mollan and Kevin Tennent allows us to do that. I’m sharing the details of their paper here in the hopes that it gets the attention from the media and policymakers that it deserves.
Abstract:
In this article we establish the impact and importance of international taxation on British overseas business circa 1900 to 1965. As the levels of national taxation rose across the twentieth century, different states began to compete for taxable income. This created international double taxation whereby taxation was due twice on the same income or profit. We examine the difficulties that this caused and the responses of firms to this challenge, through the adoption of tax-minimisation strategies, alterations to corporate structure, and the relocation of corporate domicile. We discuss how international taxation was one of the secular changes in the international business environment that contributed to the rise of large-scale multinational enterprises. We conclude by making a call for greater consideration of international taxation in international business history.
The Past Speaks 
An interesting addition! I recall Jerome Levinson of WCL at AU opining (in his course on Legal Aspects of Foreign Direct Investment) that one major contribution to the rise of the multinational was the post-WWII arrangement between the US and Europe. He claimed that the US agreed to support the Treaty of Paris and subsequent efforts at European economic integration on condition that there was no impediment raised by those treaties to US firms’ investment in European economies. The Europeans agreed, he asserted, provided that US companies established locally-domiciled entities through which to conduct their business and which would be subject to local authorities. The model proved advantageous.
I give him some credit on the point as he was staff to Frank Church, the US Senate’s subcommittee on Multinationals in the early 1970s, and later chief counsel to the IADB.
I’ll have to pay for access to the article now, I suppose.
Hi JW, can you give me the precise details of where the paper is located?
Does this declassified document help? http://www.foia.cia.gov/document/0005492980
I’ll forward you what I’ve got – I have a collection of items he assembled as a textbook. Some of it was in-class – Prof. Levinson would pull up a chair in the middle of the room and play raconteur with random shoot-out questions for two or three straight hours. Rarely had more fun in a classroom.
That’s great. Am looking forward to it!