Most scholarly research on tax treaties deals with the question of whether tax treaties are essentially necessary and how they work to eliminate double taxation, attract foreign direct investments, and promote the exchange of information. Although these questions are important, each of them treats one specific aspect of tax treaties in a way that can be described as, at best, speculative. That specific aspect is the tax policy a country wishes to implement in each tax treaty. Although everyone assumes a policy exists, no one actually knows what the policy is or any other details regarding it. All too often, tax treaties are negotiated and eventually signed without a deeper understanding of what the intended goals are for each specific partner and how to achieve these goals through the details within the tax treaty.
Tax treaties have been around for nearly a century and have not witnessed much reform since their creation. They are bilateral agreements in a world of multilateral trade agreements and can take decades to conclude. Much of the language and structure of treaties are incapable of providing guidance in contemporary relations, and these documents must be updated for use in the modern age. This paper principally focuses on the United States tax treaty policy, its history, and its inefficiency in handling the United States’ economic interests. It will also review the general background concerning the development of the current tax treaty models by the United States (U.S.), United Nations (U.N.), and the Organization for Economic Cooperation and Development (OECD). Additionally, each of the tax treaty models will be analyzed and compared. Lastly, this paper will analyze two more regions, China and Latin America, to show that the aforementioned inefficiency of international tax treaty policy is a global phenomenon and must be resolved specifically and directly by acknowledging its existence and electing to take a better approach than the current predominant system.
"Tax Treaty Models - Past, Present, and a Suggested Future,"
Akron Law Review: Vol. 50:
3, Article 1.
Available at: https://ideaexchange.uakron.edu/akronlawreview/vol50/iss3/1