The Unruly World of Tax: A Proposal for an International Tax Cooperation Forum

Abstract

International cooperation in tax policy is deeply fractured. Inconsistencies, loopholes, and ineffective mechanisms—which could be avoided if real collaboration among countries existed—have created significant inefficiency losses for decades. This Article focuses on the institutional infrastructure underlying international cooperation in tax issues and argues that the current forums in which such cooperation is encouraged do not provide an adequate platform in which countries with similar interests can effectively make a collaborative effort. To facilitate cooperation, this Article proposes to create a new institution currently missing from the international tax policy-setting arena: an informal forum for coordination among countries that share similar interests in tax policy, inspired by the model of “Like Minded Groups” in international organizations. This forum will enable countries that share similar interests to cooperate and reach understandings about necessary policy adaptations. We identify two major projects that this forum could promote—efforts to curtail tax evasion and efforts to harmonize various aspects of tax policy. We argue that this model might have significant advantages in promoting cooperation, reducing the “competitiveness” threat, advocating coordinated policies, and overcoming external and domestic pressures. In light of the current challenges in the field of tax policy, and the difficulties in forming international cooperation within the current institutional framework, the proposed model is worth serious discussion and consideration.