This week, Jon Endean (Brooklyn) reviews a new work by Luís C. Calderón Gómez (Cardozo) & Mitchell Kane (NYU), Pigou Goes Abroad, __ U.C. Davis L. Rev. __ (forthcoming).
Pigouvian taxes have had a bit of a renaissance in the literature lately. They are cited—often approvingly—as a useful tool by which a government can help address negative externalities caused by certain activities. Yet while paradigmatic examples (a soda tax intended to curb the consumption of sugary drinks) abound, there has been little consideration in the literature of how we ought to think about Pigouvian taxes in a cross-border context. Luís C. Calderón Gómez and Mitchell Kane attempt to provide such a framework.
Their basic framework thinks about Pigouvian taxes on two axes: One axis reflects whether or not the relevant market is a global (i.e., multinational) market or a local (i.e., domestic) market and one axis reflects whether or not the relevant harm trying to be curbed is a global harm or local harm. This framing yields four quadrants, and their argument is that the way in which Pigouvian taxes are implemented in each quadrant will be different.
Thus, for example, the soda tax mentioned above represents an example of what Calderón Gómez and Kane call Quadrant I; such a Pigouvian tax is an attempt to address a local market (i.e., the consumers of sugar in a given jurisdiction) on account of a local harm (i.e., the various health pathologies associated with such sugar consumption). Calderón Gómez and Kane argue that in Quadrant I, there is no real need for international cooperation in setting up a Pigouvian tax. Quadrant IV, by contrast, represents a global market (e.g., the production of greenhouse gases) with a global harm (e.g., the negative effects of climate change). For Quadrant IV, the most effective way to address the harm will often be a cross-national Pigouvian tax. Quadrants II (global harm/local market) and III (local harm/global market) present imperfect matches; the former raises the possibility of free-rider problems, while the latter raises the possibility of holdout problems. The authors supplement this matrix with consideration of interjurisdictional competition and heterogeneity, distributional concerns, and questions of institutional design.
There are two valuable contributions this article makes. First, it recognizes that with a given harm that policymakers want to address with a Pigouvian tax, the nature of both the relevant market on which the tax is imposed and the locus of the harm sought to be prevented is going to determine the parameters of whether such a tax can be implemented in a purely localized setting or whether it needs to be implemented on a cross-national scale. Second, in line with the first point, it gives a useful taxonomy under which this can be understood.
The article concludes by applying the framework to several different types of Pigouvian taxes that have been discussed in the literature: financial transactions taxes (generally Quadrant III or Quadrant IV), taxes on stablecoins (Quadrant II), soda taxes (Quadrant I), wealth taxes (Quadrant III or Quadrant I), visa sponsorship fees of the type the Trump administration has imposed on employers sponsoring H-1B workers (Quadrant III), and green subsidies for electric vehicles (Quadrant IV).
That analysis is illuminating, and not merely because it helps give color to how Calderón Gómez and Kane are thinking about the distinction between local and global markets and harms. (Indeed, it might be helpful to bring some of these examples up earlier in the paper when introducing the various quadrants to give readers a tangible example of what the different quadrants mean.) In reality, it shows that understanding the distinction between the different quadrants is actually somewhat challenging. For example, while wealth taxes are reflected in Quadrant III (the harm of extreme wealth is local, but the market upon which the tax is imposed is global), Calderón Gómez and Kane end up arguing that on account of the substantial frictions involved in wealthy individuals leaving a state, a Pigouvian tax in this context is really (as a practical matter) shifted into Quadrant I. This recognition is helpful, though it does seem to complicate both the elegance of the four-quadrant approach as well as the statement earlier on that “Quadrant III cases are the least likely of all cases to generate a feasible national or cross-national Pigouvian instrument.”
To be sure, the wealth tax example hardly disproves the overall theory—as Calderón Gómez and Kane acknowledge, it shows that specific cases are going to be influenced by more factors than just identifying whether the market or harm is local or global. (In the case of wealth taxes, the market might be global, but markets are not fluid or frictionless.) To that end, rather than using a 2×2 matrix, it might be more useful to think about it as two continua. After all, there are few cases where the harms are purely local and few cases where the harms are perfectly distributed globally, and a similar mechanic applies to markets. Thinking about these two continua as x– and y-axes would preserve the four Quadrants, but would also allow greater intra-Quadrant variability—something that the wealth tax argument demonstrates is already the case.
The final issue—one that Calderón Gómez and Kane acknowledge—comes in the idea of how a cross-national Pigouvian tax would ever be implemented. This paper is, of course, not intended to provide a comprehensive institutional blueprint for implementation, and the authors are clear-eyed about the political-economy challenges. In a way, this heightens the importance of the article’s contribution, because it demonstrates that building the political coalition necessary to implement a cross-border Pigouvian tax is the gating issue for addressing real harms. Indeed, Calderón Gómez and Kane explicitly make this point as it relates to carbon taxes. Because a Pigouvian tax on greenhouse gas emissions sits squarely in Quadrant IV, “[t]his is precisely why a domestic, uncoordinated carbon tax is such a bad idea.”
The point is well-taken, and thanks to this article by Calderón Gómez and Kane, we now have a robust and thoughtful framework for why this intuition is the case.
Here is the rest of this week’s SSRN tax roundup:
Gayan Abeyrathna (Sri Lanka Ins. Adv. Tech. Ed.), The Impact of Bulk Payment Processing on Advance Personal Income Tax (APIT) Deductions: An Illustrative Analysis (July 11, 2026)
Ellen P. Aprill (Loyola LA), Is OpenAI Foundation a Private Foundation? Should It Be? (July 27, 2026)
Leonie Babilas (Humboldt U.) & Karina Körösi (Humboldt U.), How Much and From Whom? An Information Experiment on Tax Misperceptions and Redistribution Preferences (May 27, 2026)
Ricardo Alberto Garcia Brito (Independent), A Tonnage Tax Regime for Venezuelan Maritime Hydrocarbon Transport: The Special Regime of Energy Maritime Tonnage (RETME) Denominated in Special Drawing Rights (July 7, 2026)
Samuel D. Brunson (Loyola Chicago), De-Weaponizing Bob Jones: Ambiguity, Fundamental Public Policy, and DEI (July 6, 2026)
Jonathan H. Choi (Wash U) & Paul Connell (Wisconsin), AI Deceleration (or Acceleration) by Taxation (July 17, 2026)
Gary Cornell (Scitility PBC), Billionaires: The Case for Taxing Puppies, a Note on Taxing the .01% (July 16, 2026)
Anniek van Elzelingen (Oxford Business) & Amedeo Rizzo (Oxford), From Aiken to AI: Evolution and Innovation in Combatting Treaty Shopping and Tax Avoidance in International Tax Law (Apr. 14, 2026)
Nathan C. Goldman (NC State Accounting), Devendra Kale (Rhode Island Business), Gil Sadka (UT Dallas), Does Tax Enforcement Risk Affect Private Firms? An Examination of Tax Uncertainty Disclosure and Corporate Investments (July 1, 2026)
John R. Graham (Duke Fuqua), Hyunseob Kim (Federal Reserve), Mark T. Leary (Wash U Business), & YoungJun Song (San Diego State Business), Investment, Debt and Taxes (July 6, 2026)
Martin Jacob (IESE Business), Kaitlyn Kroeger (Iowa Business), Jaron H. Wilde (Iowa Business), & Ryan J. Wilson (Iowa Business), How Do U.S. Multinationals Navigate the Global Minimum Tax? (July 23, 2026)
Tarun Jain (Sup. Ct. India), Welkin Foods Case: Supreme Court Resets India’s Commodity Classification for Taxation Laws (July 2, 2026)
Karanam Kavitha (Dept. Mgmt. Stud.), Roopa HS (Ramaiah Coll. Arts, Sci. & Comm.), & Kiran M (Ramaiah Coll. Arts, Sci. & Comm.), Revisiting Double Taxation Avoidance Agreements: Normative Analysis Framework for Equitable Taxation (Oct. 25, 2025)
Yoojin Lee (Cal State Long Beach), Shaphan Ng (Singapore Mgmt. U.), & Aruhn Venkat (UC Riverside Business), “Megadeal” Subsidies, Local Spillovers and Corporate Innovation (June 1, 2026).
Antonio Levenhagen (Federal U. Minas Gerais), Bridging the Gap Between International Taxation and Development: Are There Feasible Alternatives to the Arm’s Length Standard? (Dec. 31, 2025)
Madeleine Merkx (Erasmus U. Rotterdam), Maxime Leenders, & Danya al Khfage (Erasmus U. Rotterdam), From Generosity to Taxation: The Destructive Role of VAT in Donations? (Apr. 18, 2026).
Avijit Mukherjee (Mookherjee Associates), Shifting Paradigms in Cross-Border Service Exports: Legal Compliance and GST Registration Thresholds for Independent Consultants in India (July 1, 2026)
Kevin Munch (Kent State), Eashwar Nagaraj (Fisher Sch. Acct.), & Marvin Nipper (Friedrich-Alexander-Universität Erlangen-Nürnberg), When Do Accountants Matter? Evidence from Random Allocation of Tax Experts (July 26, 2026)
Paul Ogunwole (Wash U Business), The Analytical Turn in Corporate Taxation: Multi-Jurisdictional Data Reconstruction After Wayfair and Pillar Two (July 24, 2026)
Garrett Pratt (Tennessee Business), Who Defines Public Policy for Charitable Organizations? (July 27, 2026)
Stefano Santucci (University of Pavia), Seen but Not (Yet) Able: Digital Accounting Infrastructure, Artificial Intelligence, and the Fiscal Formalization of Micro, Small, and Medium Enterprises in Developing Economies (July 26, 2026)
Guthrie Scoblic (Missouri), Rachel Y. L. Fung (Missouri), Abigail Friedman (Yale School of Public Health), & Michael Pesko (Missouri Economics), Standardising the Measurement of Cigar Tax Rates in the USA, 2010-2024 (June 15, 2026)
Jingyi Wang (Chinese U. Hong Kong), The EU Carbon Border Adjustment Mechanism’s Restricted Recognition of Foreign Carbon Pricing: Policy Options for China (July 21, 2026)
Libin Zhang (Fried Frank), Inflated Expectations: Tax Law, Generative AI, and Lessons from the Balloon Age (May 15, 2026)
Libin Zhang (Fried Frank), Toward a Corporate AMT Singularity: Book Income with Tax Characteristics (Apr. 27, 2026)
