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Workshop: The Interlinking between Taxation, Citizenship, and Democracy

Posted on 14 June 2023

Five members of the Fiscal Citizenship Project, Lotta Björklund Larsen, Eva Matthaei, Angelika Mohr, Ralf Schenke, and Charlotte Schmidt, recently participated in the “Workshop on the Interlinking between Taxation, Citizenship, and Democracy” [1]. The workshop was organized by Yvette Lind [2] and Reuven Avi-Yonah and took place on the 8th of May 2023 at the BI Norwegian Business School in Oslo.

As the workshop title suggests, there was a great overlap of the topic of the workshop with the topics we are concerned with in the Fiscal Citizenship Project. The workshop had a multidisciplinary format, and the aim was to bring together scholars from the fields of law, politics, economics, anthropology, and history to investigate their different perspectives on how taxation, citizenship, and democracy are interconnected in various ways. This ties in neatly with some of the fundamental questions we raised when investigating what fiscal citizenship entails towards the beginning of our project. At the heart of the idea of fiscal citizenship is the relationship between the taxpayer and the state, which in a democratic society is intrinsically linked to taxpayer rights. When trying to determine how to strengthen fiscal citizenship, we must first and foremost ask which reciprocal rights and obligations must exist in this relationship to ensure both a functioning tax system on the side of the state and effective participation and compliance on the side of the individual taxpayer.

The main question posed by the workshop was how to best resolve the discordance between taxation and rights of political participation, which currently creates a considerable democratic deficit especially among individuals who live and work (and pay taxes) in a country of which they do not hold citizenship. This is particularly relevant to the topic of taxation as taxes involve significant infringement on the individual rights of taxpayers whilst forming a fundamental prerequisite for the functioning of the state. This closely links taxation to the functioning of the democratic state. For us as members of the Fiscal Citizenship Project, this served as an impulse to look more closely at the interconnectedness of fiscal citizenship and democracy, which we had previously considered implicitly rather than as an active component.

The question has also become increasingly relevant in recent years, as globalisation and increased mobility has led to a larger number of individuals being affected [3]. This raises the question how to best handle this issue in democratic societies. Possible solutions might be the linking of voting rights to tax payments rather than legal citizenship or increasing the accessibility to legal citizenship for non-citizen taxpayers [4].

The Fiscal Citizenship Team contributed with two papers to this topic:

Charlotte Schmidt (University of Würzburg) and Eva Matthaei (Freie Universität Berlin) presented a theoretical concept of Fiscal Citizenship which they developed together with Hans-Joachim Lauth (University of Würzburg). In synthesising existing theory on the willingness to pay taxes and on citizenship, the multidimensional concept addresses the reciprocal relationships between citizens and state and between fellow citizens that arise through the payment of taxes from an individual perspective. Comprising individual behaviours, attitudes, and identifications, in sum, the gradual concept serves as an indicator of social cohesion which is of particular interest in, e.g., migrant societies (the working paper is available here).

Angelika Mohr and Ralf Schenke (University of Würzburg) raised the question to what extent problems of democratic legitimacy may be mitigated by procedural safeguards protecting the rights of taxpayers throughout tax collection and verification procedures. Referring to examples from the areas of Equality and Privacy law, they emphasised the importance of such safeguards especially as tax authorities increasingly rely on new technologies (including machine learning and artificial intelligence) to ensure the enforcement of tax law in line with democratic principles.

In addition, Lotta Björklund Larsen (University of Exeter) co-presented with Benedicte Brøgger, (BI Norwegian Business School, Oslo) a paper on the interaction between corporate tax managers and national tax authorities in Norway and Sweden respectively. The paper took an anthropological perspective drawing on the notion of boundary work to illustrate how actors negotiate tax practices between the private and the public domain, a boundary that constitutes a fundamental aspect of democracy.

These papers fitted well with the other submissions accepted to the workshop, which also approached the topic from different perspectives, focusing either on individual citizens or corporations as so-called “corporate citizens”.

Regarding individual citizens, presentations addressed problems resulting from the distinctions made in democratic societies between citizens and non-citizens regarding rights of political participation. While both citizens and non-citizens tend to be taxed based on the same legal rules, as tax obligations are predominantly based on residence rather than citizenship (link between taxation and citizenship), usually only those holding legal citizenship are eligible to vote (link between citizenship and democracy). Therefore, the connection between taxation and democracy (an argument frequently employed to legitimise taxation) is much stronger for taxpayers who are citizens than for non-citizen taxpayers. This idea dates back to the US War of Independence, where resistance mounted against “taxation without representation.”

Other presentations considered the rights and obligations of corporations as members of society, including the flow of capital to low tax jurisdictions, and their involvement in democratic processes through taxation. This was particularly interesting for us as well, as they addressed topics outside the focus of our own research within the Fiscal Citizenship Project.

12 presentations throughout the day, which began with a keynote by Reuven Avi-Yonah (Michigan Law School), stimulating feedback and discussions as well as informal conversations during the breaks, and the delicious celebratory dinner in a beautiful restaurant in Oslo harbour came together in a very productive and inspiring day. The international and interdisciplinary structure of the workshop and its open and welcoming approach created a particularly friendly atmosphere and resulted in a group of people from various academic fields coming together and learning from each other.

The strength of the workshop was that the papers approached the topic from a variety of different academic fields and perspectives; it became very apparent that many points of overlap and interconnectedness were to be found between them. The extent of this surprised and delighted both organisers and participants and made the prospect of a future collaborative publication even more exciting.

The overarching ideas connecting the various contributions show that the different disciplines find considerable agreement on both the relevance of the interlinking between taxation, citizenship, and democracy and the open questions and unsolved problems that arise in this context. This highlights once again the added value of an interdisciplinary field of research in this area which is also the central idea behind the Fiscal Citizenship Project. The Oslo Workshop was a great opportunity to create new conversations and connections in this area.

With this blog post, we hope to spark interest in the interlinking of taxation, citizenship, and democracy and the questions this raises in the fields of law, economics, politics, and society. The collaborative publication based on the Oslo Workshop, due to be published next year, will give a deeper insight – stay tuned!

[3] Lind, Yvette (2020): Voting Rights Compared to Income Taxation and Welfare Benefits Through the Swedish Lens. Florida Tax Review 23 (2), pg. 713
[4] Schön, Wolfgang (2018): Taxation and Democracy. In: Max Planck Institute for Tax Law and Public Finance Working Paper 2018 – 13, pg. 49-50

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