This Essay considers the role of equity in the international tax context. While much has been written about the importance of equity in the domestic context, the conversation around international tax has failed to recognize the importance of the concept of equity. While tax policy in the domestic context has historically prioritized equity over efficiency, tax policy in the international context has not equally prioritized equity, at least not in the same way. In particular, this Essay addresses this question by revisiting the classic and dominant theory of equity in international tax policy, inter-nation equity, and its traditional roots in efficiency models focusing on the concepts of “source” and “residence.” By doing so, inter-nation equity can indirectly incorporate some of the pro-efficiency biases inherent in those concepts into international tax policy. International vertical equity attempts to remove those biases by reinvigorating the conception of ability to pay in the international context, much like in the domestic tax context. While there are still significant hurdles to implementing such a system—most notably limited data and the competing nationalistic interests to keep wealth within a country’s own borders—the theory of international vertical equity can begin to lay the groundwork to establish a more robust and equitable system for international taxation.

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