Page 97


H. David Rosenbloom, Director of the International Tax Program, with Tillinghast and Couzin

partner at Couzin Taylor, an international Canadian tax law firm allied with Ernst & Young, questioned the continued viability of the prevailing model in the 17th annual David R. Tillinghast Lecture on International Taxation, “The End of Transfer Pricing?” In transfer pricing, a multinational enterprise (MNE), for instance, might have a manufacturing subsidiary in one

jurisdiction and a retail subsidiary in another. The price at which the manufacturing subsidiary is deemed to have sold products to the retail subsidiary determines the allocation of the MNE’s overall profits among the jurisdictions, and thus the tax revenue received by each jurisdiction. And in cases where one jurisdiction bears a lower tax rate, an MNE might be able to reduce its overall tax burden by shifting more profits to the lowerrate jurisdiction. Couzin argued that t he est abl ished pa radig m for determining transfer prices, the “arm’s length principle,” in which transfer prices are determined through a hypothetical open-market transaction between two unrelated parties, is neither theoretically nor practically tenable. He suggested instead that “formulary apportionment,” wherein profits are attributed to each jurisdiction based on factors such as sales or wages, is a “true alternative” to the arm’s length paradigm.

Albie Sachs, a former judge on the Constitutional Court of South Africa who was active in the antiapartheid movement before ascending to the bench, gave a lecture sponsored by the Center for Constitutional Transitions and the African Law Association on the reform of the Kenyan judiciary in April. A Distinguished Global Fellow at NYU Law, Sachs had been appointed a member of Kenya’s Judges and Magistrates Vetting Board in 2012, charged with seeking out corruption. The perceived malfeasance of Kenya’s judges deeply disillusioned the populace, Sachs said: “You know that politicians can be crooked, you know that people run for office and bend the rules all the time, but you expect the judges to hold out.” The board began its vetting with the senior judge of the Court of Appeal (who, along with three of his colleagues on that court, was deemed unfit to continue in his position) and made its way down from there. “There was no precedent we could work with,” said Sachs. “I’d been sitting on the bench for a long time, but I’d never been judging judges. It’s a whole new experience and I found it emotionally quite difficult, intellectually very challenging, and grueling in many ways.” They not only interviewed judges for hours on end, and sometimes for several days, but they also had to do their work swiftly. In the context of Kenya’s reform efforts, Sachs also discussed the March 2013 presidential election, which was so close that the runner-up contested the results to Kenya’s Supreme Court but ultimately accepted the court’s decision against him. That was a promising sign of stability, said Sachs, who hoped the president would respect the limits placed on him by the new constitution, promulgated in 2010. “Then some of the worst features—the assassinations, the thievery, the nepotism, the tribalism entering into everything—might become a thing of the past,” he said, noting that Kenya may serve as a model for any other countries that might be envisaging similar processes.

Judging Judges

What Hinders Hindustan? Is India destined to be a superpower? Not in the foreseeable future, in the eyes of historian Ramachandra Guha, Distinguished Global Fellow at NYU Law last year. Guha, whose awardwinning books include India After Gandhi: The History of the World’s Largest Democracy (2007) and The Unquiet Woods: Ecological Change and Peasant Resistance in the Himalaya (1989), discussed the past and potential of India as a democracy and global power at two Law School events last October. In a conversation with David Malone, then-president of the International Development Research Centre and an adjunct professor at NYU Law, Guha focused on the history of India as a democracy, tracing the successes and challenges of the country’s constitutional development. “Whereas [India’s] experiment with religious pluralism is a very qualified success— it’s partly successful, partly failure— our experiment with linguistic pluralism is a substantial success, and in my view it’s Indian democracy’s greatest contribution to the practice of modern democracies,” Guha said at the event sponsored by the Hauser Global Law School Program. “It’s an underappreciated achievement.” In his second lecture, sponsored by the Center for Constitutional Transitions, Guha argued that India’s internal fault lines will prevent it from becoming a global power anytime soon. He identified several challenges facing India today: continuing conflicts over linguistic, caste, and religious identity; enduring inequality in Indian society; and the abuse of India’s natural environment. Guha also emphasized that India is still a relatively young experiment in democracy, national unity, and pluralism—all of which need to be “carefully nurtured”—noting that only 65 years have passed since the country declared independence from Britain.


ransfer pricing is the valuing of transactions between related parties and often bears significant tax consequences for the taxpayer and taxing jurisdictions. Robert Couzin, founding


An Untenable Tax?

NYU Law Magazine 2013  

The annual magazine from NYU School of Law.

NYU Law Magazine 2013  

The annual magazine from NYU School of Law.