April 3

8:00-10:30am Breakfast
Juan Jose Ibarretxe, President of the Basque Country from 1999 to 2009
“The Basque Experience: Constructing Sustainable Human Development”

Programs for the National Security Forum
Sand’s Hotel & Casino

The old paradigm of “global voids local” was not met and has given way to a new paradigm in which “local moves the world”. In fact, in words of J. Stiglitz, the countries “that take charge of their own destiny” are the ones which have benefited most from globalization. Thus, the prophetic words pronounced in the 1970s by E.F Schumacher: “small is beautiful” became an affirmation made by Professor Etxenike: “the great challenge of small”, or in other words, the need to look at the world and forward without forgetting roots. All this is reflected in the fact that there are more and more countries in the United Nations and also in the EU, or the “Basque Case” itself, a case of socio-economic-political transformation –, which is today object of study in several universities throughout the world. The conclusion is that the “expectation” today resides in the polynomial “I + D + i + K” (Research + Development + Innovation + Culture). Although it is possible – and also desirable- to learn from the experiences of others regarding R&D&I policies, due to the fact of lack of recipes in life, the polynomial will not work if countries don´t incorporate their own “K” element of culture. Thus, in the current global society, the local response, the own and differentiated project, it is the driving factor. And therefore identity, the right to decide, culture… the K element is not only related to the political concept of nation in a globalized world, but to the achievement of Sustainable Human Development.

International Perspectives on Fiscal Federalism The Basque Tax System

Basque Conference Room, MIKC 305
Mathewson-IGT Knowledge Center
University of Nevada, Reno campus.

11:00-11:30 Presentation

Xabier Irujo, Maite Asensio, Gemma Martínez

11:30-12:15 Economic Theories of Fiscal Federalism: USA and Basque Country

Nieves Pereda, Deputy Director of Tax Collection

The impact of public financial resources in the economy of a country or state has not been studied as much as the impact of public expenses but, actually, the consequences of different income sources can be relevant and have important impact in public policies: there is not the same fiscal co-responsibility if a country or state is financed by taxes or by grants.

This paper has focused on the analysis of the most relevant economic aspects in the financing of public systems in two intergovernmental models: the Basque Country ante United States, in order to analyze their capacity to reach adequate levels of autonomy of sub-central governments, efficiency, income distribution, equity, accountability and others, considering the agreements and relations between central and sub-central governments and their ability to overcome possible undesirable effects.

The important differences and similarities between the two mentioned models have been considered in the constitutional and political frameworks.

12:15-13:00 The Impact of the Basque Economic Agreement on its Community Economic Development

Sofia Arana Landín, Director of International Projects, University of the Basque Country (UPV/EHU)

The Basque Economic Agreement, as an instrument of self-government, not only has a great significance in matters such as taxation and financial relations but, above all, it has a direct impact on community economic development.

As most of the taxes in the system belong to the provincial councils, it means that the provincial councils are empowered to take their own decisions that can clearly affect the economy, thus the socio-economic system, while being fully liable for them.

This way, the fact that these entities (the territories of Gipuzkoa, Bizkaia, and Araba) can have their own autonomy in the decisions affecting them has contributed to the creation of a rare system where the preservation of the traditions becomes intermingled with investing in Innovation, Research and Development creating synergies that have proved to be extremely effective and successful and can be considered to be a model to be followed.

Thus, finding roots in the so-called “auzolan” (or community work) we have a system where CSR becomes the base for the so-called special “Basque culture of work” and so Social Economy has boomed.

13:00-14:30 Lunch

14:30-15:15 A Comparison between Wealth Transfer Taxes in the Basque Autonomous Community and the United States

Aitziber Etxebarria, senior technician in tax collection of the Government of Bizkaia.

The paper is called “A Comparison between Wealth Transfer Taxes in the Basque Autonomous Community and the United States”. It is divided into six sections:

  • American and Basque Legal Traditions and Inheritance Laws
  • Wealth Transfer Taxes in the United States
  • Comparison Between the Basque Autonomous Community and the US Fiscal Systems
  • Historical Background and Future of Wealth Transfer Taxes
  • Conclusion

The article analyzes the differences between the civil law system, on which the legal tradition of the Basque Autonomous Community is based, and the common law system, basis of the US legal tradition. Then, it continues studying their inheritance laws and tools for estate planning in both territories. After this introductive section, the second part explains the main characteristics of wealth transfer taxes in the United States, highlighting not only its federal tax system but also state taxes as it is a federal government.

The third part of the article goes through the most important differences between taxes from both territories and explains the harmonization concerns to be taken into account. Then, the historical backgrounds of both countries are summarized, and related expert reports and studies explained. The article finishes with the conclusions of the research.

15:15-16:00 Federalism and the Cities of the 21st Century

Roberto Bernales Soriano, Professor at the University of Deusto

The modern urbanization process started in the XIX with the Industrial Revolution and it has not stopped yet. There is a resurgence of the cities due to their role in the new knowledge economy as creative hubs of the digital economy. The economic crisis strengthens this trend and its consequences (gentrification, inequality, segregation), with a clear impact in the political institutions i.e. the need to reinforce the powers of local institutions and their financial resources. This means the possible restructuring of the powers of the federal states where the classical dual model (federal government-state government) could be replaced by a three-tier model (federal – state – local).

Australia and Canada are examples of countries with low local autonomy where the challenges of the new situation crash with the constitutional and institutional framework. In the Basque Country, the situation is comparable since the new law of Local Institutions does not foresee any specific status for the type of metropolis that the new situation demands.

In any case, the “devolution” of powers to the local government in order to tackle the new social and economic realities has its limits and should be considered carefully.

16:00-17:00 Round table

April 4

Rotunda, MIKC 201
Mathewson-IGT Knowledge Center
University of Nevada, Reno campus.

10:10 Presentation

Greg Mosier, Dean of the College of Business
Debra Moddelmog, Dean of the College of Liberal Arts

10:30-11:00 Tax Systems in the US and the Basque Country: A Comparative Approach

Gemma Martínez, Head of the Tax Policy Unit of the Foral Treasury in the Government of Bizkaia

This paper aims to em identify those aspects which can be regarded as common the federal tax structure in the United States of America and the Basque tax and financial system, bearing in mind the existence of great differences between the historical context in which the origin and evolution of each tax model took place.

This analysis presents those similarities that can be found in both initial tax structures and also some common trends that can be observed in the evolution of both models. In addition, it identifies some of the common fundamentals of both tax systems, which are closely related to the federal features of the USA and the Basque legal order, though in the Basque case this federal nature is rejected by those who consider the system one of high but mere fiscal decentralization. Some final thoughts are presented to conclude.

11:00-11:30 Tax Harmonization in the United States compared to the European Union and the Basque Country

Mikel Amuriza, International Tax Unit of the Government of Biscay

This article consists of a comparative study between the differences and similarities in tax harmonization and collaboration between American and European fiscal federalism and the Economic Agreement of the Basque Country.

Therefore, an analysis has been made of the federal fiscal system of the United States, in comparison with the European Union and secondly of the state of Nevada that can be compared with the Basque Country because it is the same decentralized state level.

Subsequently, tax competition in the US is analyzed both at the international level and at the level of states. It should be noted that tax competition prevails, with the main objective of attracting large companies to each state, on the harmonization and collaboration among them that exists only at the level of particular interests among some states.

Likewise, it studies the limitations in fiscal regulation that the states have and mainly the commerce clause that establishes that the regulation of international and interstate commerce corresponds to the Congress and not to the states. The jurisprudence of the US Supreme Court in this area is studied and compared to the jurisprudence of the European Court of Justice.

Then,  a comparison is made, mainly of Corporate Income Tax and Value Added Tax (Sales Tax in the United States) and finally, a conclusion of the research is offered.

12:00-12:45 The Basque and Swiss Fiscal Systems Building Processes as a Source of Lessons for the European Integration Process

Mikel Erkoreka, Researcher and Manager of the Basque Center for fiscal federalism studies

The evolution of the taxation powers of Basque and Swiss sub-central governments from the early XX century up to the present. A source of lessons for the European Union.

The paper focuses on explaining and comparing the exercise of tax power by Basque and Swiss sub-central governments from a historical perspective. On the one hand, Switzerland, by tradition, was and continues to be one of the most paradigmatic examples of European federalism. On the other, under the agreement system (Concierto Económico), the Basque provinces of Araba, Bizkaia, Gipuzkoa, and Navarre formed an exception within Spain, shaping a federal-type system of fiscal and financial relations between these sub-state entities and the state. By comparing and contrasting the two case studies, the paper aims to identify key factors involved in nation-state building processes in federal systems. In particular, the benchmarking exercise places special emphasis on the extent and impact of the institutional changes in the tax landscape.

The first part of the paper establishes the historical and institutional framework of both realities. After that, it is going to analyse and compare the extent and scope of the fiscal and financial self-government exercised by Basque and Swiss sub-central governments in the first third of the XX century and from the last third of the XX century to the present. The paper ends by providing some conclusions and reflections on the European integration process.

13:00-14:30 Lunch

14:30-15:15 Last Session. Conversation with Juan J. Ibarretxe.

15:15-15:30 Closure

Aitor Soloeta