The tax code was not designed to accommodate modern information technology monopolies. The complex global economy is distinguished by a post-industrial merger with the Information Age. This merger was solely based on software applications and those who create, market and sell these solutions across the economic demographic of the global economy. Software or "application" tools dominate modern economic activity across most industries. Competitive advantage now requires applications to expedite sales cycles or innovate to reduce labor costs. Even pizzerias are in on the action: they leverage communications and information technologi (CIT) to allow customers to use their smart phones to reorder their registered pizza favorites or vary their orders. The pizza orders are distributed to the nearest affiliated pizzeria that makes, bakes and delivers the pizza to the requested location.



The ubiquity of leveraging applications has materially changed how business is done. Although I would agree that taxation reform is challenging, it is the only practical method, other than anti-trust reform, to raise taxes from the IT application developers that are achieving uncommon returns to scale through replication of applications - much like the music and film industry had done with CDs and now Internet distribution.



Some readers would scoff at any attempt to raise taxes from the technology leaders. Why tax success? The simple answer is because sucess for the few doesn't translate into broader success for many. We need not diverge into a discussion of the Laffer curve and Reaganomics to conclude that the current low tax system for these bemoth IT global enterprises has enriched a demographic of well-placed and technology connected class - whether they are technology analysists, top tier tech insiders or v.c. firms that hunt Unicorns.



Carried interests, share buy-backs, see-through offshoring of profitable subsidiaries

are the tax reforms that are needed to reduce the trend toward income inequality. It has been well-known for over a decade that these three tax 'loop holes' or "tax expenditures" offer a select group of individuals with financial accumen or global corporate enterprises or aspirations to earn significant incomes that are NOT taxed until the beneficiaries choses to have their untaxed holdings characterized as income after taxable events: selling carried interests and stock-buy-backs to third parties and repatriating untaxed foreign profits to the U.S. to pay taxes.



The solution is to reform the tax code. However, in an open global market that G8 members participate, aggressive tax avoidance schemes are permitted. And therein lies the greatest challenge of tax reform.



The OECD has proposed a global tax solution to avois base erosion and profit shifting to low or no tax jurisdictions. The challenge would be to get most of the top - ranked OECD members, in GDP terms, to sign a multilateral tax accord based on the OECD BEPS standard agreement.



The challenge with BEPS is that it doesn't consider domestic tax laws that offer excessive "tax deductions" that distort "taxable income" for which tax rates are applied. In the case of the U.S. taxcode, we see 26 U.S. Code § 167 - Depreciation, as a complex series of exceptions and allowances that would challenge most economists who rarely go deep into the weeds of modern tax regimes to understand that taxation is a significant determinant of income inequality.



The Information Age offers applications to refomr the global tax systems into one enforceable and universal core global taxation system. International Financial Reporting Standards, IFRS, is a good start for public companies and reporting issuers. A subset of IFRS can form the basis for all other private entities determination of taxable income. Tax rates can vary within a tighter range across OECD members - to disallow tax havens to propogate NIL tax regimes that are the common methods used to engage in global enterprise aggressive tax avoidance schemes.



In the absence of a concerted effort to formulate a core global tax system that follows international standards of income determination (IFRS) and eliminates low or NIL tax havens as safe tax habors for the world's wealthiest corporations and families, the income inequality challenge, that leads to greater variance and distribution of wealth, will not be resolved.