Double Taxation : The Unappreciated Ideal

When income generated by business activity conducted in one country is ultimately consumed by an individual living in another country, both countries have typically been thought to have the right to tax such income. One basis for this result is that both countries provide taxpayer-funded benefits with respect to such income: One country provides benefits that allow the income to be more efficiently generated, and the other country provides benefits that allow the income to be more enjoyably consumed. Professor Schlunk extends this insight to the purely domestic context. Thus, he explains, even if income generated by business activity is consumed in the same country where the business activity takes place, it continues to be true that the country provides taxpayer-funded benefits that both enable the income to be more efficiently generated and that allow the income to be more enjoyably consumed. But as in the multinational context, this dichotomy provides a compelling reason to tax the income twice: once as it is generated and once as it is consumed. If the former tax is called the corporate income tax' and the latter is called the individual income tax, double taxation (more or less as we currently know it) results