Book Review: Taxation, Citizenship and Democracy in the 21st Century

1 Introduction and purpose

The book “Taxation, Citizenship and Democracy in the 21st Century,” edited by Yvette Lind and Reuven S. Avi-Yonah1 and published by Edward Elgar Publishing in 2024, constitutes a significant contribution to the research and academic discussion on the interconnections between taxation, citizenship, and democracy.

This review provides a comprehensive analysis and critique of the book, presents its content by chapter and its most significant themes and concepts in detail, and offers a few conclusive remarks on its contribution to ongoing tax law debates.

2 Topics Covered

Chapter 1, authored by Yvette Lind and titled “Chartering the disciplinary boundaries surrounding taxation, citizenship, and democracy,” serves as an introduction. The chapter describes how the work finds its origins and provides an exhaustive overview of the structure of the volume.

Chapter 2, authored by Douglas Bamford and titled “Democratic legitimacy, sovereignty, and international taxation,” explores the relationship between democracy and taxation, particularly in the context of international tax policymaking. Bamford begins by defining the concepts of democracy and representative democracy and their value, and proceeds to argue that democracy requires equality among participants in decision-making processes. The exclusion of individuals undermines the legitimacy of the decisions that are imposed on them. Bamford then explains how this simple picture becomes more complex in an international context. Examining the OECD and G20 Base Erosion and Profit Shifting (BEPS) project, he questions its democratic nature. Bamford then reflects on the necessity of establishing a World Tax Organization with authority over international taxation issues. He emphasizes that, in line with democratic principles, such an organization would need to be more inclusive in order to achieve legitimacy.

Chapter 3, authored by Tamir Shanan and Doron Narotzki and titled “Taxing migrants more fairly in an era of globalization,” explores the evolving landscape of the global economy, particularly emphasizing the intensified mobility of human capital. The authors call for a re-evaluation of international tax rules established over a century ago, in the light of the recent technological advancements and the recognized benefits of cross-border migration for economic growth. The discussion details the tax implications and challenges posed by this mobility, advocating for a new framework that equitably allocates taxing rights between countries of origin and destination for cross-border migrants. The chapter examines various scholarly perspectives to propose alternative solutions to contemporary tax residency challenges.

Shanan and Narotzki present several key recommendations. They contend that an individual should only be deemed to have renounced their fiscal residency upon acquiring a new residence that subjects them to comprehensive taxation at rates comparable to those applied to the general public in that jurisdiction. The chapter concludes with the authors’ recommendation to safeguard the tax base while also ensuring the progressive nature of income tax systems.

Chapter 4, authored by Charlotte Schmidt and Eva Matthaei and titled “Conceptualizing fiscal citizenship,” seeks to bridge the gap between the fields of taxation and citizenship using social contract theory as its foundation. The authors acknowledge that globalization and digitalization have increasingly diminished the traditional connection between citizenship and national borders, allowing individuals to simultaneously possess legal, behavioral, and identificatory citizenship in multiple countries. As a response, and synthesizing existing studies, the authors introduce the concept of “fiscal citizenship.” By interpreting taxation as a key embodiment of the social contract, Schmidt and Matthaei argue that fostering voluntary tax compliance necessitates a comprehensive examination of the relationship between taxation and citizenship, and encourage future research, positing that previous large-scale population surveys have either only superficially explored the relationship between taxation and citizenship or have focused extensively on one aspect at the expense of the other. The authors offer their theoretical framework as a solid foundation for subsequent studies.

Chapter 5, written by Roberto Ramos Obando and titled “Tax as a genuine link,” examines the concept of what a “genuine link” is within the context of the global tax landscape. This term is often, if not exclusively, utilized to explore issues related to sovereignty and nexus. It serves as a basis for exercising tax authority, reflecting a citizen’s obligation to contribute to the collective welfare of the state, in turn reinforcing the state’s sovereign functions and enabling the effective implementation and management of a fair tax system. The genuine link is established through the framing provided by residence, source, and citizenship, thereby creating a duty that connects an individual to the state. In this sense, the chapter continues the discussion of citizenship and taxation started in Chapter 4. Obando maintains that each state has the authority to establish its own membership criteria. Some countries consider “political allegiance” or familial connections—such as blood relations or ancestry. Others place greater emphasis on an individual’s physical presence within their territory. Since citizenship is not a universally agreed upon concept, the identification of what the “genuine link” is becomes central. If physical presence or residence remain a common criterion for connecting individuals to a state, the chapter illustrates various alternative proxies that have emerged in response to globalization.

Chapter 6, written by Ira K. Lindsay and titled “Citizenship in modular tax systems,” examines how the increasing cross-border mobility of workers poses challenges to the traditional distinctions between resident and non-resident taxpayers, both as a normative concept and in its practical—and susceptible to manipulation—applications. The increasing international mobility of high-income taxpayers presents new challenges for nations striving to maintain public revenue while ensuring an equitable distribution of tax burdens: the taxation of individuals who relocate between different jurisdictions risks becoming an “all-or-nothing” issue. The varying tax policies and levels of public services offered by different jurisdictions to their residents has led to a phenomenon known as “jurisdiction shopping,” in which high-income or wealthy taxpayers exploit low-tax jurisdictions for income tax purposes while continuing to benefit from access to public goods and services funded by higher-tax jurisdictions. Lindsay suggests that modular approaches, “systems which collect revenue from the typical taxpayer through a range of distinct taxes,” would help curb such strategies. This approach, whose evolution can be traced back to the rapid proliferation of value-added taxes across numerous jurisdictions, can be characterized as a “multifaceted tax system” in which the collection of revenue does not depend on a comprehensive income tax framework, where income is allocated to specific jurisdictions, but relies instead on a range of separate, distinct taxes. In a modular system, income from labor, passive income, wealth in the form of real property, and consumption can be taxed in different jurisdictions, thus mitigating the “all-or-nothing” risk associated with income tax liability being tied to whether the taxpayer qualifies as a tax resident.

Chapter 7, authored by Anna-Lena Scherer and titled “The interlinking between taxation, citizenship, and democracy: why should and how can we integrate large corporations?,” addresses the concept of taxation as a tool for providing financing to states and as essential to the functioning of democracy. Typically, such discussions focus on individuals. However, in this contribution, Scherer directs attention to large corporations and discusses how these relate, or do not relate, to the interplay between taxation, citizenship, and democracy. Scherer approaches the subject using the ethical framework of corporate citizenship: if corporations are corporate citizens, something which entails both rights and obligations, then they should contribute their fair share of taxation. The chapter then provides solid justifications for reconsidering corporate taxation and aligning it with the civic responsibilities and duties that come with representation. Scherer concludes by pointing to how the research conducted thus far has introduced new questions that need to be addressed and how further work is required to distinguish between large corporations as corporate citizens and smaller enterprises.

Chapter 8, is written by Angelika Mohr and Ralf P. Schenke and titled “The role of procedural safeguards in legitimising the use of automated risk management systems in tax administration: the case of the non-citizen taxpayer.” The chapter addresses the critical issue of ensuring the legitimacy of automated risk management practices employed by tax administrations, with particular emphasis on non-citizen taxpayers. Mohr and Schenke emphasize that tax administrations must ensure that taxes are managed fairly and in accordance with the law. In recent years, to optimize resource allocation, tax administrations have increasingly adopted risk management systems to assess tax cases based on their risk level. These systems require the collection and use of vast amounts of information, including personal and sensitive data, such as income sources and tax deductions requested or obtained. This data not only concerns financial matters but also reveals personal information about taxpayers. As a result, these systems must operate with a degree of secrecy to function effectively, but this lack of transparency that surrounds the algorithms they use is in direct conflict with the rule of law. Therefore, particular attention must be given to ensuring that such processes comply with privacy and equality laws, a concern that becomes even more pronounced in the case of non-citizen taxpayers who, despite paying taxes, lack the right to vote and thus cannot influence the decision-making process through democratic means.

Chapter 9, authored by Tessa Davis and titled “Taxation and belonging: the history and rhetoric of tax, full citizenship, and community membership in the United States,” examines the concept of citizenship from what the author calls its formal and performative aspects. While this multifaceted understanding of citizenship is well-acknowledged in fields such as anthropology, sociology, and political science, Davis argues it remains by and large unexplored in the field of tax law, limiting the effective analysis of citizenship issues. She posits that citizenship is not a static notion, but rather a dynamic construct that undergoes continual evolution, and that a broader, more comprehensive framework is needed to transform the discourse surrounding tax policy and the way citizenship is defined and exercised in the context of tax obligations. The chapter further elaborates on the concept of performative citizenship from a historical perspective, explaining how the status of being a taxpayer has historically been used as a key argument for claiming citizenship rights, especially by marginalized groups, such as women and African Americans. Examples are provided that span from 19th century feminist activist Elizabeth Cady Stanton to the civil rights movement, when Black Americans invoked their status as taxpayers to demand equal access to public education. Davis concludes that the tax system should recognize the connection between citizenship and the rights and benefits it entails.

Chapter 10, written by Shayak Sarkar, is titled “A new perspective on capital migration: social security, taxation, and noncitizen farmworkers” and discusses capital migration and its connections to taxation, citizenship, and democracy. Sarkar describes how, when capital and corporations move across borders, some companies seek to gain tax advantages by adopting a “corporate citizenship” based on differential tax burdens in multiple countries. Discussions on capital migration often center around large corporations and their mobile funds: the chapter, however, shifts the focus towards individuals and presents a view of how the migration of people and capital are intertwined in the American legal system. Sarkar examines the way mobile capital, mobile employees, and capital investment through migration are brought together by legislation that allows temporary employee transfers between different company branches. Sarkar describes how this idea of capital flow has historical roots, tracing back to the 1935 Social Security Act, and extends to migrant farmworkers who are then denied Social Security annuities. While most such early 20th-century exclusions have largely been eliminated for U.S. citizens and legal permanent residents, at least formally, foreign agricultural workers still remain without the protection offered by the Social Security system. The chapter offers conclusive reflections on the broader implications of this ongoing inequality.

Chapter 11, authored by Jinyan Li and titled “The state as a corporation or family? Insights from a comparative study of citizenship and taxation in Canada and China,” begins by offering a general reflection on the function of taxation, emphasizing its role not only as a mechanism for generating public revenue, but also as a tool for redistributing income, regulating economic activities, and providing social benefits. When comparing countries such as Canada and China, this basic framework is present in both: however, upon closer examination, notable differences emerge. For instance, while progressive income tax is the primary instrument for redistribution in Canada, the tax system in China is more focused on corporate income tax and consumption. From this perspective, Li focuses on how citizens interact with the state in matters of taxation and examines the similarities and differences between the Canadian and Chinese tax systems.

The author observes that while the relationship between citizens and the state operates according to a “corporate” model in Canada, in China it follows more of a “family” model. These differences are significant: under the “corporate” model, citizens have a legally guaranteed process for exercising their rights, similar to the rights of shareholders. In Canada, the state engages with citizens as though it were a public corporation, with tax laws reflecting this equilibrium. In China, under the “family” model, citizens do not have access to the same processes: the state operates in a manner akin to how the head of a family may make decisions on behalf of family members. Tax laws, therefore, reflect this leadership-driven approach and the general governance model, which emphasizes collective interests and the leadership role of the Communist Party. These two models regulating the relationships between citizenship and taxation—corporate and familial—provide a useful lens through which to compare different tax systems and constitute an interesting contribution to the field of comparative tax studies.

Chapter 12, written by Benedicte Brøgger and Lotta Björklund Larsen, is titled “Too close for comfort: a case study of boundary work implementing cooperative compliance policies in Norway and Sweden.” The chapter examines the national adaptations of the OECD’s Cooperative Compliance (CC) initiative in Norway and Sweden. While the primary objective of the initiative was to improve tax compliance through enhanced collaboration with corporations—by requiring them to disclose tax issues that might give rise to interpretative uncertainties, thereby reducing litigation and promoting greater compliance—Brøgger and Björklund Larsen found that the outcomes in both Sweden and Norway were largely negative. Rather than fostering a cooperative environment, these approaches resulted in increased mutual suspicion and a lack of transparency. These adverse outcomes stand in stark contrast to the more successful implementations of the CC initiative in Denmark and Finland. In Sweden, corporations were reluctant to participate and enlisted prominent tax lawyers to articulate their concerns in public forums and industry publications. In Norway, corporations that initially had a positive outlook began seeking ways to resist when they were required to respond to specific inquiries. The factors underlying the different ways the CC failed in Sweden and Norway have been identified. In both instances, corporations exhibited considerable opposition to the CC policies, but acted differently: in Sweden, dissent was prominently articulated through media outlets and academic discussion, where the CC framework was perceived as conflicting with established legal principles; in Norway, resistance emerged primarily through practical concerns expressed in less public collaborative forums. The authors reflect that corporations in both Sweden and Norway did not act “in a democratic void.”

3 Conclusions

Each of the twelve chapters of “Taxation, Citizenship, and Democracy in the 21st Century” addresses specific aspects of the book’s substantial contribution to the academic conversation on the layered relationships between taxation, citizenship, and democracy. The book’s structure is clear and moves from core concepts to specific applications, practical cases and as well as comparative studies.

What sets it apart, however, is its multidisciplinary approach: the collection features essays from experts in disciplines such as law, economics, sociology, philosophy, social anthropology, and history, greatly enriching the exploration of these complex topics. This broad tapestry is historically contextualized and skillfully brought into play to address critical global issues in contemporary society, such as migration, globalization, and the evolving dynamics of the global economy. By examining the influence of these phenomena on tax systems and citizenship, the book successfully argues for a take on fiscal policies that is finely linked to social justice, civil rights, and democratic participation and weaves it into contemporary tax law and policy discussions, calling attention to the need for greater inclusivity and equity.

The book makes a significant contribution to tax law scholarship through its innovative multidisciplinary approach. Its impact could have been further enhanced by more explicitly contrasting this methodology with traditional legal scholarship. While the book acknowledges this distinction, a more pedagogical approach—one that clearly elucidates the advantages of a multidisciplinary perspective for legal scholars trained in traditional methods—would have opened up a broader dialogue and facilitated dissemination both within tax law scholarship and in related disciplines.

The book concludes with an index of key terms, providing readers with a valuable tool that significantly simplifies navigating the text and identifying core concepts.

“Taxation, Citizenship, and Democracy in the 21st Century” brings to the light the complexity hidden in plain sight in the gap between disciplines, and clearly and convincingly demonstrates that 21st century solutions to taxation problems cannot be found within the limited purview of tax law alone.

Cristina Trenta is Professor of Public Law at Linnaeus University and Guest Professor of Public Law at the School of Information Technology, Halmstad University.