Wei Cui (Peter A. Allard School of Law, the University of British Columbia) has posted Retaliatory Taxation and the Birth of America’s First Tax Treaty on SSRN. Here is the abstract:
In 2025, the U.S. threatened retaliatory taxation against countries that adopt tax rules that “are extraterritorial or disproportionately affect American companies,” both invoking a long-dormant provision of the Internal Revenue Code and proposing a new “revenge tax.” This paper illuminates the origins of retaliatory taxation with new historical material that substantially expands our knowledge of the early history of U.S. international taxation. The investigation reveals a time when the type of legislation instantiated by the original retaliatory tax was the norm in the U.S., and when, by contrast, cooperation through tax treaties struggled to take root on American soil. This history underscores the deep fragility of the tax treaty as a mode of international cooperation for the U.S. because of the constitutional infirmities it suffers, the difficulty of separating the international provisions of the income tax from issues of international trade, and, most profoundly, the other policy options available to the U.S. as a hegemonic power. This paper concludes that just as the original retaliatory tax of 1934 was no isolated historical quirk, new retaliatory taxation may be no passing show of Trumpian histrionics.
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