Yariv Brauner (Florida), Income and Territory: A Purpose-based Reform of Income Sourcing Rules, 74 Can. Tax J. ___ (2026):

Since the inception of the international tax regime in the twentieth century, states have been taxing income based on both the residence of taxpayers and the source of their income. Twenty-first-century developments have rendered this arrangement untenable, leaving the international tax regime in need of reform. This Article is the central contribution of a series of three articles that examines the feasibility of international tax reform. The first two articles demonstrated that residence is an inadequate and theoretically indefensible basis for taxation in the twenty-first century for both individual and corporate taxpayers. This Article examines whether source—the sole remaining broadly accepted basis for international taxation—could independently serve this role. It does so first, by evaluating whether, and explaining why, source remains an appropriate basis for income taxation.

It then proceeds to examine the existing, near-universal, source rules and their suitability to a contemporary income tax regime. Finally, it proposes reforms of the current source rules that states may adopt to render them better suited to their purpose. The Article concludes with an assessment of the political obstacles that the proposed reform may face, arguing that these are not insurmountable, and that the proposed reforms of the source rules are necessary, whether an exclusive source-based regime is adopted or not.

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