Report on the Discussion

The commentator opening the first round of discussion of the morning session stated that the optimistic statements by

Owens

and

Hartnett

on a cooperation between taxpayers and administrations sounded appealing but that conditions in the United States might be less favorable to such an approach. The larger size of the country might render reputational sanctions for overly aggressive tax planning less efficient, and the lower budget of the IRS in relation to its duties allowed for fewer audits — so he assumed. Furthermore, differences in cultures might have an influence.

Owens

acknowledged that the fact of the U.S. being the economic center of the developed countries and innovation leader might have some impacts on tax behavior. With regards to the resources of tax administrations he emphasized that comparisons over the past five years showed that many tax administrations had to some degree shifted their resources from audit to service activities. He maintained that both good service and effective enforcement were prerequisites for good compliance and that the quality of administrative resources was at least as important as the mere quantity.

Hartnett

added that administrations today also focused to a greater extent on managing the risk of avoidance, thus creating higher risks of detection for aggressive tax shelters and causing more difficulties if such shelters fail.