The Tax Cartel: How Global Harmonization Undermines Growth, Sovereignty, and Democracy
Executive Summary
International tax cooperation once focused on preventing double taxation while respecting national sovereignty. Over the past three decades, the Organisation for Economic Co-operation and Development, the European Union, and the United Nations have pursued a broader agenda aimed at limiting tax competition, reallocating taxing rights, and imposing minimum corporate tax rates. The Base Erosion and Profit Shifting initiative, the OECD’s two-pillar framework, EU blacklists, and the proposed U.N. tax convention shift authority away from national governments and toward institutions with less democratic accountability.
The economic case for this agenda is weak. Corporate taxes discourage investment, reduce productivity, and depress wages. Tax competition helped cut average statutory corporate rates across OECD countries from about 47% in 1980 to roughly 23% in 2023, yet corporate-tax revenue remained stable or increased, total tax-to-GDP ratios rose, and high-income earners paid a growing share of taxes. The predicted “race to the bottom” never arrived.
This brief uses the Democratically Deficient Organizations (DoDO) framework to explain why tax harmonization continues despite that record. In essence: politicians in high-tax countries, intergovernmental bodies, advocacy groups, public-sector unions, foundations, and affiliated academics pursue different interests but support the same policies. Their funding, research, lobbying, and moral rhetoric create the appearance of consensus while narrowing democratic debate and insulating tax policy from competition.
Governments should abandon the global minimum tax, reject the proposed U.N. tax convention, reform the EU blacklist, and end public funding for organizations that campaign for tax harmonization. International institutions should return to the facilitation of cooperation among sovereign states rather than dictating tax rates or punishing jurisdictions that choose lower ones. Restoring tax competition would strengthen investment, wages, fiscal discipline, and democratic control.
“Man is generally considered by statesmen and projectors as the materials of a sort of political mechanics. Projectors disturb nature in the course of her operations in human affairs; and it requires no more than to let her alone, and give her fair play in the pursuit of her ends that she may establish her own designs. Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things. All governments which thwart this natural course, which force things into another channel or which endeavour to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.” — Adam Smith (1755)[1]
I. Introduction
Imagine the outcry if the president issued an executive order requiring every state to impose a minimum corporate tax rate of 15%. The order would almost certainly be unconstitutional. It would also strip states of a core democratic choice.
Yet international institutions have pursued a similar result with far less public debate. Over the past three decades, they have built a system designed to limit tax competition among countries and pressure governments toward common rules and minimum rates.
States compete to attract individuals and businesses. They do so through public spending, regulation, and taxation. In one of economics’ most cited articles, Charles Tiebout argued that this competition gives governments incentives to provide public goods and levy taxes that reflect residents’ collective preferences.[2] Tax competition can therefore help keep political power with the governed rather than those who govern.
For individuals, this process depends heavily on mobility.[3] Tiebout recognized that his theory applies most readily where people can move across jurisdictions with few barriers, as they can among U.S. states.
The same basic logic applies to companies, though they value a narrower set of public goods. These include clear and flexible company law, strong shareholder protections, simple incorporation procedures, and reliable contract enforcement.[4] Lower corporate tax rates also increase after-tax profits, making them attractive to shareholders.
Many companies are also highly mobile. Their legal domicile need not match the location of their owners, employees, or physical assets. That mobility gives jurisdictions incentives to improve the mix of legal services and taxes they offer.
Smaller jurisdictions have often responded by specializing in company law, incorporation services, and related legal infrastructure, while imposing low or zero corporate tax rates. Their success is consistent with Tiebout’s theory. Competition has encouraged jurisdictions to offer legal and fiscal arrangements that companies value.
A broad coalition has spent the past three decades trying to weaken that competition. It includes politicians, intergovernmental bodies, philanthropic foundations, advocacy groups, public-sector trade unions, and academics. Together, they have built an elaborate system of international tax coordination.
Supporters argue that multinational companies and wealthy individuals exploit differences among national tax systems, producing a “race to the bottom.” Their proposed remedy is greater tax harmonization, including common tax bases, disclosure rules, blacklists, and minimum rates.
This study examines the campaign for tax harmonization, the institutions created to advance it, the effects of those institutions, and the organizations that sustain them. It uses the Democratically Deficient Organizations (DoDO) framework, which explains how coalitions can form and persist even when their policies conflict with society’s broader interests.[5]
Section II traces the main developments in international tax coordination over the past three decades, including the Organisation for Economic Co-operation and Development’s (OECD) 1998 campaign against “harmful tax competition,” the Base Erosion and Profit Shifting project, the global minimum tax, and the proposed United Nations tax convention.
Section III examines the economic evidence on tax competition, with particular attention to corporate and capital taxation and the role of competition among jurisdictions.
Section IV explains the DoDO model, identifies the principal actors in the international-tax coalition, and shows how they create the appearance of consensus.
Section v draws conclusions and proposes reforms.
II. From Tax Coordination to Tax Harmonization
For most of the 20th century, international tax agreements focused on preventing double taxation. These treaties respected national sovereignty by allocating taxing rights among jurisdictions so that the same income would not generally face tax twice.
The Organisation for European Economic Co-operation promoted this approach beginning in the 1950s. Its fiscal committee argued that double taxation discouraged investment and economic development.[6] Its successor, the Organisation for Economic Co-operation and Development (OECD), continued that work and published a “Draft Double Taxation Convention on Income and Capital” in 1963.[7] The OECD still supports such treaties.[8]
Over the past three decades, the OECD’s role has expanded well beyond preventing double taxation. It has led campaigns against “harmful tax competition,” created the Base Erosion and Profit Shifting initiative, pressed low-tax jurisdictions to adopt its rules through peer review and exclusion, and developed the Pillar One and Pillar Two tax regimes. The United Nations has since begun work on an even broader global tax convention.
This section traces that expansion. Section III then examines how these measures affect tax competition, national sovereignty, and democratic control.
A. The OECD Targets ‘Harmful Tax Competition’
In May 1996, the OECD’s governing Council of Ministers directed the organization to “analyse and develop measures to counter the distorting effects of harmful tax competition on investment and financing decisions and the consequences for national tax bases, and report back in 1998.”[9] The Group of Seven (G7) Council later stated the concern more plainly:
Finally, globalisation is creating new challenges in the field of tax policy. Tax schemes aimed at attracting financial and other geographically mobile activities can create harmful tax competition between States, carrying risks of distorting trade and investment and could lead to the erosion of national tax bases. We strongly urge the OECD to vigorously pursue its work in this field, aimed at establishing a multilateral approach under which countries could operate individually and collectively to limit the extent of these practices. We will follow closely the progress on work by the OECD, which is due to produce a report by 1998.
The resulting report, “Harmful Tax Competition: An Emerging Global Issue,” identified a range of “harmful tax practices.” Its main targets were preferential regimes offered by OECD members, such as reduced rates for certain companies and patent-box regimes, as well as “tax havens.”[10]
The report identified four features of a tax haven: no or nominal taxes, limited transparency, laws that restrict information sharing with other governments, and tolerance of shell companies with little or no genuine economic activity.
In 2001, U.S. Treasury Secretary Paul O’Neill objected that the initiative treated low tax rates as inherently suspect and threatened to dictate domestic tax policy to other jurisdictions:
I am troubled by the underlying premise that low tax rates are somehow suspect and by the notion that any country, or group of countries, should interfere in any other country’s decision about how to structure its own tax system. I also am concerned about the potentially unfair treatment of some non-OECD countries. The United States does not support efforts to dictate to any country what its own tax rates or tax system should be, and will not participate in any initiative to harmonize world tax systems. The United States simply has no interest in stifling the competition that forces governments – like businesses – to create efficiencies.[11]
Under U.S. pressure, the OECD narrowed the tax-haven portion of the project. It temporarily stopped using the “no substantial activities” criterion to determine which low-tax jurisdictions counted as uncooperative and shifted its focus toward transparency and information exchange. However, the broader framework targeting low- and no-tax jurisdictions remained intact.
The retreat proved to be merely tactical. The OECD expanded its authority through transparency rules, information-sharing initiatives, working groups, committees, and peer-review mechanisms. After the 2008 financial crisis, that machinery supported a much more ambitious international tax agenda, which we now explore.
B. BEPS and the Inclusive Framework
The OECD’s tax-coordination project centers on its Base Erosion and Profit Shifting (BEPS) initiative, launched in 2013 at the Group of 20’s (G20) direction.[12] Its premise appears in the name. BEPS seeks to protect national tax bases by limiting companies’ ability to shift profits from high-tax to low-tax jurisdictions.
By the 2000s, large U.S. multinationals were increasingly using differences among national tax codes to book much of their foreign profit in low-tax jurisdictions and defer U.S. corporate income tax on those earnings.[13] Critics portrayed these arrangements as egregious tax avoidance, even though the companies generally acted within the law. That criticism helped supply the political case for BEPS.
In 2013, the OECD adopted a 15-point BEPS Action Plan. It included four minimum standards governing transfer pricing, treaty abuse, country-by-country reporting, and dispute resolution.[14]
The G20/OECD Inclusive Framework has become central to the project. Established in 2016, it now includes 147 jurisdictions, each committed to implementing the BEPS Action Plan.[15]
Neither the G20 nor the Inclusive Framework has formal lawmaking authority. The G20 supplies the political mandate for the OECD’s tax agenda, while the Inclusive Framework gives that agenda a veneer of broad participation and legitimacy.[16]
C. Enforcing BEPS Through Reputation and Exclusion
OECD and G20 members designed the BEPS rules largely to address profit shifting from higher-tax countries. In principle, those countries could have changed their domestic laws and tax treaties. Instead, they adopted rules that depended on cooperation from the low-tax jurisdictions receiving the shifted profits.
The OECD lacked formal enforcement power, so it relied on reputation and exclusion. Jurisdictions that joined the OECD/G20 Inclusive Framework, adopted the BEPS package, and submitted to peer review retained access to the treaty system and the status of a cooperative jurisdiction. Those that stayed outside or failed to comply risked designation as noncooperative by the OECD, the G20, and the European Union, as well as greater scrutiny from banks, tax authorities, and commercial counterparties.
BEPS Action 5 also revived the OECD’s campaign against “harmful tax practices.”[17] The Forum on Harmful Tax Practices reviews preferential tax regimes for features that facilitate base erosion and profit shifting.
Action 5 restored a substantial-activities requirement for low-tax jurisdictions. Those jurisdictions could no longer permit entities with no genuine operations, employees, premises, or other economic connection to claim local tax residence. Many responded by adopting economic-substance laws and new reporting requirements.
Since 2017, the Council of the European Union has maintained a blacklist of “noncooperative jurisdictions for tax purposes.”[18] The EU bases its criteria heavily on OECD standards and evaluates third countries in part on their compliance with BEPS.
Most offshore financial centers depend on access to European capital, banks, investors, and professional-services firms. The threat of blacklisting therefore gave the EU considerable coercive power and pushed many jurisdictions to adopt BEPS-compliant reforms.
The blacklist also applies a double standard. The EU screens third countries against criteria that it does not apply to its own members, even though several member states might struggle to satisfy them.
D. Global Minimum Taxes
Over the past decade, the OECD and, more recently, the United Nations have pursued global minimum-tax rules.
1. The OECD’s Two Pillars
The OECD’s approach consists of two rule sets, known as Pillar One and Pillar Two, developed through the informal Inclusive Framework.
Pillar Two centers on the Global Anti-Base Erosion rules, known as GloBE. These rules impose a 15% minimum effective corporate tax rate on multinational enterprises with annual revenue above €750 million.[19]
GloBE applies country by country. When a corporate group’s effective tax rate in a jurisdiction falls below 15%, a top-up tax applies after an allowance for payroll and tangible assets.
The jurisdiction where the shortfall arises has first priority through a qualified domestic minimum top-up tax. If that jurisdiction does not collect the difference, the ultimate parent’s jurisdiction may do so under the income-inclusion rule. If neither acts, the undertaxed-payments rule allows other countries to collect the top-up, often by denying deductions.
This structure has created conflict among OECD members. The undertaxed-payments rule fits uneasily with existing tax treaties, and members of the U.S. Congress have proposed retaliatory taxes on companies based in countries that apply it to U.S. firms.
Competition among jurisdictions has also continued. Some countries have adopted corporate tax rates as low as 9%, while others have considered rates between 5% and 15%. The minimum tax has shifted business among jurisdictions rather than ended competition for it.
The United States has not implemented Pillar Two and may never do so. Republican members of the House Ways and Means Committee warned that the undertaxed-payments rule would allow foreign governments to tax U.S. domestic profits and proposed retaliatory legislation.[20] In January 2026, the OECD negotiated a “side-by-side” package that largely exempted U.S.-headquartered multinationals from Pillar Two’s most burdensome provisions.[21]
Pillar One applies only to companies with more than $20 billion in annual global revenue and profit margins above 10%. It would reallocate “Amount A,” equal to 25% of profit above the 10% threshold, to the countries where customers are located.
This rule would require large U.S. technology companies to pay more tax to foreign governments and less to the U.S. government. The OECD released a draft Multilateral Convention to implement Amount A in October 2023, but the convention has not opened for signature.[22]
2. The U.N. Tax Convention
In December 2023, the U.N. General Assembly created an ad hoc committee to draft terms for a Framework Convention on International Tax Cooperation. In December 2024, it approved terms of reference for an intergovernmental negotiating committee.
A total of 110 countries voted in favor. The United States voted against the measure and withdrew from the negotiations in February 2025, calling the process “unwelcome overreach.” The United Kingdom also opposed the resolution.[23]
The proposed convention would add another layer of supranational tax governance to the OECD-led system. The project has expanded considerably since the OECD’s 1998 transparency initiative. It now reaches toward a binding global tax treaty that would further constrain national tax sovereignty and competition.
Proponents argue that greater harmonization would strengthen democracy. The next section examines why its effects may run in the opposite direction.
III. The Economic Case for Tax Competition
Against the push for tax harmonization described in Section II, this section examines how corporate and capital taxes affect investment, wages, growth, and government revenue. It also considers how competition among jurisdictions can improve legal institutions, discipline tax policy, and attract mobile capital.
The evidence cuts against the claim that tax competition creates a fiscal “race to the bottom.” Lower corporate tax rates have often coincided with stable or rising revenue, greater investment, and a larger tax share paid by high-income earners.
A. Corporate Taxes and Economic Growth
Taxes fund public goods such as national defense, policing, and impartial courts. Governments should raise that revenue through taxes that distort economic activity as little as possible. As Adam Smith observed, “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice.”[24]
By “easy taxes,” Smith appears to have meant taxes that impose the least drag on production and growth. A 2008 study by OECD economists compared the effects of different taxes and reached a clear conclusion:
Corporate taxes are found to be most harmful for growth, followed by personal income taxes, and then consumption taxes. Recurrent taxes on immovable property appear to have the least impact. A revenue neutral growth-oriented tax reform would, therefore, be to shift part of the revenue base from income taxes to less distortive taxes such as recurrent taxes on immovable property or consumption.[25] [Emphasis added.]
Corporate income taxes reduce the after-tax return on investment and therefore discourage some projects that otherwise would proceed. The effect is especially pronounced for productive and mobile forms of capital. In an open economy, capital tends to move toward jurisdictions offering the highest after-tax returns. Countries that tax corporate income more heavily therefore attract less investment and may experience slower productivity and wage growth.
A substantial empirical literature supports that relationship. In a study covering 85 countries, Simeon Djankov and his coauthors measured the taxes imposed on a standardized midsize business. After controlling for other factors, they found:
The effective corporate tax rate has a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. For example, a 10 percent increase in the effective corporate tax rate reduces aggregate investment to GDP ratio by 2 percentage points. Corporate tax rates are also negatively correlated with growth, and positively correlated with the size of the informal economy.[26]
A later study in the Journal of Accounting and Economics developed an alternative measure based on the cash effective tax rates paid by publicly listed firms.[27] That measure captured statutory rates, other features of the tax code, enforcement, and corporate tax planning. The authors found “a strong robust negative relation between country-level effective tax rates and future macroeconomic growth.”[28]
Studies of tax changes reach similar conclusions. Christina D. Romer, who chaired President Barack Obama’s Council of Economic Advisers, and David H. Romer examined major U.S. tax changes after World War II. They found that a tax cut equal to 1% of gross domestic product increased GDP by between 2.5% and 3%.[29]
Other estimates are smaller but still substantial. Karel Mertens and Morten O. Ravn found that a 1-percentage-point reduction in the average corporate tax rate increased real GDP per capita by 0.4% after one year and 0.6% after two years.[30]
Investment provides one of the main channels through which corporate taxes affect growth. Recent research, including a 2023 study by the OECD Economics Department, finds that lower corporate taxes increase business investment.[31]
Michael Christl and Monika Köppl-Turyna examined changes in European Union countries’ rankings on the Tax Foundation’s International Tax Competitiveness Index. They found that a one-point improvement in a country’s corporate-tax score was associated with a cumulative 0.16% increase in economic growth over three years.[32]
Research on the composition of taxation points in the same direction. Increases in consumption taxes and value-added taxes generally impose less harm on growth than increases in corporate income taxes. Broadening the tax base by eliminating deductions and targeted incentives also tends to cause less damage than raising corporate rates.[33]
B. Workers Bear Much of the Corporate Tax
Supporters of corporate tax harmonization often argue that corporate taxes redistribute wealth from capital owners to workers. That claim overlooks two problems.
First, corporate taxes discourage investment. Lower investment slows innovation, productivity growth, and economic expansion. The result is less wealth to redistribute and fewer gains for consumers and workers.
Second, workers bear a substantial share of the tax through lower wages. Corporate taxes reduce the after-tax return on capital, which leads firms to invest less and lowers worker productivity. Companies then employ fewer workers or pay them less.
Arnold Harberger first demonstrated this effect theoretically in 1962.[34] Later empirical studies reached similar conclusions. Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini analyzed more than 55,000 companies across nine European countries and found that, over time, a $1 increase in corporate taxes reduced the wage bill by about 75 cents.[35]
Clemens Fuest, Andreas Peichl, and Sebastian Siegloch found a comparable result using German municipal data. Their 2018 study estimated that a €1 increase in corporate taxes reduced wages by about 51 cents.[36]
C. The Costs of Taxing Capital
Supporters of tax harmonization also favor common taxes on private capital, including wealth taxes on individuals and profit taxes on corporations. When personal wealth derives from corporate profits, imposing both taxes can amount to double taxation, with serious consequences for saving, investment, and growth.
The literature on corporate taxation forms part of a broader body of research on capital taxes. The Chamley-Judd theorem, developed independently by Christophe Chamley in 1986 and Kenneth Judd in 1985, shows that the optimal long-run tax rate on capital income approaches zero.[37]
The logic is straightforward. Capital taxes compound over time. Even modest rates can therefore impose large long-run welfare costs by discouraging the saving and investment that support future consumption.
Experience with wealth taxes points in the same direction. Most European countries that imposed annual net wealth taxes in 1990 later repealed or narrowed them. Austria abolished its tax in 1994. Denmark and Germany followed in 1997, the Netherlands in 2001, Finland, Iceland, and Luxembourg in 2006, and Sweden in 2007. France replaced its broad wealth tax in 2018 with a narrower tax on real estate.
Today, only a few OECD countries retain comprehensive annual net wealth taxes. They include Colombia, Norway, Spain, and Switzerland, where cantons impose the tax.[38]
Countries that tried annual wealth taxes often found them hard to administer, easy to avoid or evade, and costly relative to the modest revenue they produced.
D. Jurisdictional Competition and Better Governance
Charles Tiebout’s seminal 1956 paper showed how competition for mobile residents and businesses can discipline governments.[39] When people and firms can “vote with their feet,” jurisdictions face pressure to provide public goods efficiently and avoid excessive taxation.
Smaller jurisdictions that depend heavily on legal and financial services have especially strong incentives to offer clear law and low taxes. A jurisdiction that relies on mobile capital cannot afford arbitrary rules, legal instability, or tax rates that drive companies elsewhere.
The evidence reflects those incentives. Small jurisdictions that develop into financial centers often combine low or zero taxes on corporations and capital with effective government and reliable legal systems.[40]
Delaware taxes companies only on locally derived profits and operates a specialized court for corporate disputes. It supplies the corporate law used by most large U.S. companies.
The Cayman Islands impose no direct taxes and maintain a highly developed legal system, with the Judicial Committee of the Privy Council in the United Kingdom as the court of final appeal. Cayman has become the leading domicile for investment funds.
The British Virgin Islands also impose no direct taxes and use a legal system similar to Cayman’s. They have become a leading international jurisdiction for company formation, much like Delaware on a global scale.
Bermuda also uses the Privy Council as its highest court. It historically imposed no direct taxes, though it recently adopted the global minimum tax for qualifying companies. Several of the world’s largest reinsurance companies are based there.
Dubai, Singapore, and Hong Kong also rely to varying degrees on English law, maintain relatively low taxes, and operate as major financial centers.
These jurisdictions compete by offering legal certainty, adaptable regulation, and efficient administration. Offshore financial centers support dense networks of lawyers, accountants, professional directors, and trust and fund administrators. Their commercial success depends on maintaining the rule of law.
They also channel capital from developed countries into less developed ones. Investors can rely on the law of the financial center when the destination country’s legal system offers less certainty.[41] Development-finance institutions often route investments through these jurisdictions for the same reason.[42]
Competition has also changed corporate tax rates. Across OECD countries, the average statutory corporate tax rate fell from about 47% in 1980 to roughly 23% in 2023.[43] Corporate tax revenue nevertheless remained relatively stable at about 2.5% to 3.5% of gross domestic product.[44]
Lower rates may have broadened the tax base by reducing incentives for avoidance and attracting investment. As a result, corporate tax revenue held steady or, in some countries, increased.
E. No Race to the Bottom
The tax-harmonization agenda rests on a central empirical claim that tax competition creates a “race to the bottom” and erodes government revenue. The data do not support it.[45]
Romer and Romer found that 45% to 90% of corporate tax cuts were self-financing. Lower corporate rates increased economic activity enough that revenue gains from other taxes offset much of the initial loss.[46]
OECD data tell a similar story. Between 1965 and 2022, the unweighted average tax-to-GDP ratio across OECD countries rose from about 25% to nearly 34%.[47] Corporate tax revenue also trended upward.
Tax systems have become more progressive at the same time. In the United Kingdom, the top 1% of earners paid about 11% of income tax in 1978-79 and roughly 29% in 2023-24.[48] In the United States, the top 1% paid 14.1% of all federal taxes in 1979 and 27.3% in 2022.[49]
Corporate tax rates therefore fell while total revenue remained stable or increased, tax-to-GDP ratios rose, and higher earners paid a larger share of the tax burden. Competition reduced one of the taxes most harmful to growth without weakening governments’ fiscal capacity. That record contradicts the premise behind the harmonization project.
IV. The Coalition Behind Tax Harmonization
If tax competition generally promotes growth and disciplines government, why has tax harmonization gained so much institutional support? This section answers that question through the Democratically Deficient Organizations (DoDO) framework.
The framework explains how politicians, intergovernmental bodies, advocacy groups, unions, foundations, academics, and corporations can pursue shared policies despite limited electoral accountability. Their motives differ, but their interests often align around higher and more uniform taxes on corporations and capital.
This section first explains how DoDO coalitions form and operate. It then identifies the main organizations supporting tax harmonization, examines the incentives that sustain their cooperation, and shows how moral language and claims of consensus narrow the range of acceptable debate.
A. How DoDOs Form and Operate
The DoDO framework explains how policies emerge through institutions that lack direct electoral accountability. It applies to organizations with no democratic mandate, such as corporations, nongovernmental organizations, and foundations, as well as institutions whose authority is several steps removed from voters, such as government agencies and intergovernmental bodies.
The framework starts from a simple claim. These organizations often pursue ideological goals, material interests, or both. They may coordinate directly or move in parallel toward the same ends, even when those ends conflict with the broader interests of voters.
The framework also draws on the principal-agent problem. When principals delegate authority to agents, they surrender some control, and agents rarely carry out their wishes perfectly. Economists have long studied this problem.[50]
In government, the gap between principals and agents grows wider. Modern states operate through large bureaucracies that most voters cannot closely observe.[51] Voters also disagree among themselves, leaving politicians considerable discretion. When politicians delegate authority to agencies or intergovernmental organizations, the connection between voter preferences and policy weakens further. That creates more room for outside organizations to influence officials.
The DoDO framework builds on two related theories of political behavior. The first is Bruce Yandle’s Baptist-and-Bootlegger coalition. The second is Timur Kuran and Cass Sunstein’s theory of availability cascades.
Yandle used Sunday liquor restrictions to explain how moral campaigners and commercial interests can support the same rule for different reasons. Baptists favored the restrictions on religious and moral grounds. Bootleggers favored them because limits on lawful sales increased demand for illicit alcohol. The groups did not need to coordinate. They merely preferred the same policy.
Kuran and Sunstein’s availability-cascade theory explains how ideas gain political force through salience and repetition.[52] People have limited attention and tend to focus on risks that come readily to mind. A dramatic event, sustained campaign, or repeated claim can make an issue seem more common or urgent than the evidence supports.
“Availability entrepreneurs” then amplify the concern. News coverage expands, public anxiety grows, and policymakers begin to treat the claim as settled fact.
A DoDO network can generate and reinforce these cascades. Advocacy groups frame problems in alarming terms because alarm attracts attention, donations, and political support. Journalists repeat those claims because alarming stories draw readers. Politicians embrace proposed remedies because they fear electoral punishment. Foundations and companies fund supportive research. Agencies cite that research to justify larger mandates.
As the cascade builds, committees, reports, and commissions follow. Laws and treaties may come next. New institutions then acquire staff, budgets, and constituencies with an interest in preserving them. Claims of consensus and necessity reinforce the arrangement.
Each participant may act rationally according to its own incentives. The combined result can still work against the public interest.
B. The Tax-Harmonization Coalition
The tax-harmonization DoDO ecosystem brings together politicians in high-tax countries, intergovernmental bodies, advocacy groups, public-sector unions, foundations, academics, and coordinating organizations. Each group has distinct motives, but their efforts reinforce one another.[53]
1. High-Tax Politicians
Politicians in high-tax countries such as the United States, United Kingdom, Germany, and France favor corporate taxes partly because they can present them as taxes on businesses rather than individuals. Polling consistently shows that voters prefer taxes they believe someone else will pay.[54]
During the postwar era, capital controls and relatively closed national markets limited the mobility of corporate tax bases. Governments therefore had more freedom to impose high statutory corporate tax rates.[55]
That freedom narrowed after countries began removing capital controls in the late 1970s, trade barriers fell, and financial transactions moved online. Investors could more easily structure transactions through jurisdictions offering low or zero taxes and reliable legal systems.[56] High-tax countries responded by reducing corporate tax rates and improving their legal and fiscal offerings, as Section III describes.[57]
Many politicians still wanted to tax profits earned elsewhere, but unilateral action created a coordination problem. Each government had an incentive to cut its own rate to attract investment. Their answer was coordinated restraint on tax competition.[58]
2. The OECD Tax Cartel
As early as 1977, high-tax countries used the OECD to advance a “Recommendation of the Council on Tax Evasion and Avoidance.” It declared that “tax avoidance and evasion are contrary to fiscal equity, have serious budgetary effects and distort international competition.”[59]
The recommendation directed the OECD’s Committee on Fiscal Affairs “to pursue a programme of work to facilitate the anti-avoidance and evasion procedures of Member countries and improve the means available for international co-operation and exchanges of information and experiences.”[60] That work produced a series of reports and, eventually, the Base Erosion and Profit Shifting initiative.
This agenda appears to conflict with the OECD’s stated mission of promoting economic growth.[61] The organization has long supported treaties that reduce double taxation, and its own research finds that corporate taxes impose especially large costs on growth.
Andrew P. Morriss and Lotta Moberg attribute the shift to the OECD’s institutional incentives:
We ask why the OECD evolved from a forum focused on lowering transactions costs to increase private sector competition across borders into a cartel aimed at restricting competition among states. We conclude that this transition was in part the result of entrepreneurship by a group of OECD staff who spotted an opportunity to expand their mission, yielding a concomitant increase in resources and prestige. They accomplished this by providing a framework for interests within a group of high tax states to create a cartel that would channel competition in tax policy away from areas where those states had a competitive disadvantage and toward areas in which they had a competitive advantage.[62]
The OECD does not act alone. The European Union reinforces BEPS through its blacklist and related tax rules. The OECD/G20 Inclusive Framework, though lacking formal legal authority, creates the appearance of broad participation while implementing rules designed largely by a small group of powerful countries.
The EU also funds organizations that support tax harmonization. It helped establish the EU Tax Observatory, whose International Tax Observatory is directed by Gabriel Zucman. The organization says it conducts research, promotes democratic debate, and connects researchers, advocacy groups, and policymakers. Its work largely supports progressive income taxation, coordinated corporate taxes, and wealth taxes as responses to inequality.
3. Advocacy Groups
Organizations such as the Tax Justice Network, Oxfam, Christian Aid, and the Global Alliance for Tax Justice supply moral and political support for international limits on tax competition.
Their campaigns frame corporate taxation as a question of fairness, redistribution, and corporate responsibility. They argue that competition creates a “race to the bottom” in corporate tax rates.[63]
These groups often claim that low-tax jurisdictions divert money that could fund hospitals or schools and help companies and wealthy individuals avoid paying their “fair share.” Such claims can fuel availability cascades directed against low-tax jurisdictions, multinational companies, and wealthy individuals.
The campaigns also give politicians political cover to support BEPS, wealth taxes, corporate-tax coordination, and the proposed United Nations tax convention.
4. Public-Sector Unions
Public-sector unions support high corporate tax rates for two main reasons. They believe higher rates increase the revenue available for public spending, including member salaries. Higher taxes on private companies can also weaken the case for contracting public services to private providers, helping protect union jobs.
Unions including the AFL-CIO, the American Federation of Teachers, the Service Employees International Union, and Local 23 support tax-harmonization campaigns through donations, lobbying, coalition participation, and publications.[64]
Public Services International represents more than 30 million public-sector workers and co-publishes the annual “State of Tax Justice” reports. In 2022, it established the Network of Unions for Tax Justice, which includes more than 30 unions across four continents.[65] The International Trade Union Confederation has declared that “tax justice is workers’ justice.”[66]
5. Foundations and Governments
Public-sector unions provide only part of the funding behind tax-harmonization campaigns. Large U.S. foundations, including the Ford Foundation and Open Society Foundations, have also funded the Tax Justice Network and related groups.[67]
The same foundations may support research, advocacy, and intergovernmental organizations. That funding structure can make a relatively narrow donor base appear to represent broad agreement.
Governments also fund organizations that lobby for policies those governments support. The European Union finances several pro-tax advocacy groups. The European Commission created the EU Tax Observatory with a €1.2 million grant.[68] Norway’s aid agency, Norad, has funded the Tax Justice Network, while the Finnish and Dutch foreign ministries have supported tax-justice groups through development budgets.
Christopher Snowdon calls this the “sock puppet” phenomenon. Governments fund advocacy groups that then lobby for the same policies.[69]
6. The Academic Network
Much of the academic case for tax harmonization relies on the concept of “profit misalignment.” The term resembles “profit shifting,” but the two measure different things.
Profit-shifting research asks whether companies contractually move profits to lower-tax jurisdictions under existing law. Profit-misalignment research begins with a hypothetical allocation based largely on where a company’s employees and physical assets are located. Profits count as “misaligned” whenever the actual allocation differs from that model.
This method tends to produce much larger estimates of profits attributed to low-tax jurisdictions than conventional measures of profit shifting. Many studies using the Tax Justice Network’s version of profit misalignment were written by its staff and affiliates, including Chief Executive Alex Cobham and adviser Petr Janský.[70]
7. ICRICT
In 2015, many of the leading organizations in the tax-harmonization coalition created the Independent Commission for the Reform of International Corporate Taxation (ICRICT). Its website describes its origins:
ICRICT was initiated by a coalition of the following intergovernmental, civil society and labor organizations: Action Aid, Alliance-Sud, the Arab NGO Network for Development, the Center for Economic and Social Rights, Christian Aid, the Council for Global Unions, the Global Alliance for Tax Justice, Oxfam, Public Services International, Tax Justice Network, South Center and the World Council of Churches. The creation and work of ICRICT is supported by Action Aid, Laudes Foundation, Luminate, The Open Society Foundation and the Wellspring Philanthropic Fund.[71]
ICRICT’s commissioners include prominent advocates of higher taxes on corporations and capital. The organization describes them as “a group of leaders from around the world who believe that, at this moment in history, there is both an urgent need and an unprecedented opportunity to bring about significant reform of the international corporate taxation system.”[72]
Its reports promote reforms that extend beyond the OECD’s original agenda. Its first report criticized BEPS for treating companies within a multinational group as separate legal entities rather than as a single enterprise.[73]
Some of ICRICT’s proposals later appeared in the OECD/G20 global minimum tax, including the principle of a corporate-tax floor. ICRICT nevertheless considers the agreement too weak. It favors a 25% minimum rate rather than 15%, broader reallocations of taxing rights, and a U.N.-led Framework Convention on International Tax Cooperation.[74]
C. Moralizing Tax Policy
The DoDO ecosystem’s most corrosive method of manufacturing consensus may be the treatment of fiscal policy as a moral test. Terms such as “tax justice,” “tax abuse,” and “illicit flows” recast disputes over tax policy as contests between virtue and vice.
Under this framing, jurisdictions that choose low tax rates commit “abuse,” while companies that lawfully reduce their tax liabilities engage in “base erosion.” Legitimate disagreement becomes moral deviance.
That rhetoric weakens democratic self-correction. Once dissent is treated as evidence of bad faith, policymakers have less reason to confront competing evidence or reconsider failed assumptions.
V. Conclusions and Policy Recommendations
The tax-harmonization campaign rests on a claim the evidence does not support. Tax competition has not produced a fiscal “race to the bottom.” OECD research identifies corporate income taxes as especially harmful to growth, yet statutory corporate rates fell for decades while total tax revenue rose.[75] Corporate-tax receipts remained stable or increased, and high-income taxpayers paid a growing share of the total burden.
Competition among jurisdictions also encouraged governments to improve company law, legal certainty, and administrative efficiency. Harmonization weakens that discipline. It protects high-tax governments from competitive pressure while shifting authority toward institutions several steps removed from voters.
The resulting system also suffers from an accountability problem. Intergovernmental bodies, advocacy groups, unions, foundations, and affiliated researchers reinforce one another’s claims, often using moral language to present contested policy choices as settled obligations. That process narrows democratic debate and allows institutions without direct electoral mandates to shape national tax policy.
Reform should restore sovereignty, accountability, and subsidiarity.
A. Abandon the Global Minimum Tax
Pillar Two is a coordinated effort by governments to restrain competition over corporate tax rates. It suppresses the same competitive pressure that helped reduce one of the taxes most damaging to investment, productivity, and wages.
The United States has not adopted Pillar Two, and the OECD’s side-by-side arrangement already weakens the claim that the regime establishes a coherent global standard. Governments should abandon Pillar Two rather than preserve an unstable system of top-up taxes, retaliatory measures, and overlapping claims to the same profits.
B. Reject the U.N. Tax Convention
National governments should retain authority over their own tax systems, including the power to compete for investment and mobile capital. That authority forms part of fiscal sovereignty and helps discipline public spending and taxation.[76]
The proposed U.N. Framework Convention on International Tax Cooperation would add another layer of supranational control to an already extensive OECD-led system. Governments should reject it.
C. Reform the EU Blacklist
The European Union should stop using blacklisting to pressure sovereign jurisdictions into adopting tax policies designed by the OECD and EU. The current system applies standards to third countries that the EU does not consistently impose on its own members.
Any remaining review process should focus narrowly on fraud, secrecy, and refusal to exchange legally required information. It should not punish jurisdictions merely for choosing low tax rates.
D. End Government Funding for Tax Campaigns
Governments should stop funding advocacy groups and research organizations that campaign for policies those same governments support. Public financing of the Tax Justice Network, the EU Tax Observatory, and similar organizations blurs the line between independent research and state-sponsored advocacy.
Research used to justify international tax rules should disclose its funding, methods, institutional affiliations, and potential conflicts. Policymakers should also distinguish estimates of unlawful evasion or actual profit shifting from models that label profits “misaligned” because they depart from a hypothetical allocation.
The postwar international order created institutions to help sovereign states cooperate, not to replace democratic control over domestic policy. International tax coordination has drifted well beyond preventing double taxation and exchanging information. It now seeks to determine minimum rates, reallocate taxing rights, and penalize governments that choose different policies.
That drift carries economic and political costs.[77] It weakens competition, burdens investment and wages, and transfers power away from voters. Restoring fiscal sovereignty would strengthen both economic growth and democratic accountability.
[1] From a lecture recorded by Dugald Stewart. See Kwok Ping Tsang, Is the 1755 Smith the Prequel of the 1776 Smith?, Adam Smith Works (Oct. 6, 2021), https://www.adamsmithworks.org/documents/tsang-1775-adam-smith-1776-prequel.
[2] Charles M. Tiebout, A Pure Theory of Local Expenditures, 64 J. Pol. Econ. 416, 416–24 (1956).
[3] Id. at 424 (“If consumer-voters are fully mobile, the appropriate local governments, whose revenue-expenditure patterns are set, are adopted by the consumer-voters. While the solution may not be perfect because of institutional rigidities, this does not invalidate its importance. The solution, like a general equilibrium solution for a private spatial economy, is the best that can be obtained given preferences and resource endowments.”).
[4] Companies also typically consider the availability of skilled labor and other factors tied to public goods.
[5] Julian Morris, Defending Democracy from the DoDOs: How Power Escapes Democratic Control, Int’l Ctr. for L. & Econ. (Mar. 12, 2026), https://laweconcenter.org/resources/defending-democracy-from-the-dodos-part-i-how-power-escapes-democratic-control. As explained below, the DoDO framework builds on and extends Bruce Yandle’s Baptist-and-Bootlegger theory. See Bruce Yandle, Bootleggers and Baptists—The Education of a Regulatory Economist, 7 Regulation 12, 12–16 (1983); Adam Smith & Bruce Yandle, Bootleggers and Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics 15–40 (Cato Inst. 2014). It also draws on broader insights from the public-choice school.
[6] Org. for Econ. Co-operation & Dev. (OECD), Draft Double Taxation Convention on Income and Capital 1963 7 (Oct. 19, 1963), https://www.oecd.org/en/publications/draft-double-taxation-convention-on-income-and-capital_9789264073241-en.html.
[7] Id.
[8] OECD, Model Tax Convention on Income and on Capital 2017 (Full Version) (Apr. 25, 2019), https://www.oecd.org/en/publications/model-tax-convention-on-income-and-on-capital-2017-full-version_g2g972ee-en.html; OECD, The 2025 Update to the OECD Model Tax Convention (Nov. 19, 2025), https://www.oecd.org/en/publications/2025/11/the-2025-update-to-the-oecd-model-tax-convention_c7031e1b.html.
[9] OECD, Meeting of the Council at Ministerial Level, Paris, 21–22 May 1996, Communiqué (1996), https://government.is/news/article/1996-05-21-Statement-at-the-Meeting-of-the-OECD-Council-at-Ministerial-Level-Paris-May-21-22-1996.
[10] OECD, Harmful Tax Competition: An Emerging Global Issue (May 19, 1998), https://www.oecd.org/en/publications/1998/04/harmful-tax-competition_g1ghgc60.html.
[11] U.S. Dep’t of the Treasury, Treasury Secretary O’Neill Statement on OECD Tax Havens (May 10, 2001), https://home.treasury.gov/news/press-releases/po366.
[12] G20, G20 Leaders’ Declaration: Los Cabos Summit (June 2012), https://www.g20.utoronto.ca/2012/2012-0619-loscabos.html; OECD, Addressing Base Erosion and Profit Shifting (Feb. 2013), https://www.oecd.org/en/publications/2013/02/addressing-base-erosion-and-profit-shifting_g1g2a9bc.html.
[13] One well-known example was the “Double Irish,” a tax-planning structure widely used by technology and pharmaceutical companies.
[14] OECD, Action Plan on Base Erosion and Profit Shifting (2013), https://doi.org/10.1787/9789264202719-en.
[15] OECD, Members of the OECD/G20 Inclusive Framework on BEPS (updated Dec. 5, 2025), https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/beps/inclusive-framework-on-beps-composition.pdf.
[16] See generally Jakob Vestergaard & Robert H. Wade, Establishing a New Global Economic Council: Governance Reform at the G20, the IMF and the World Bank, 3 Glob. Pol’y 257, 257–69 (2012), https://doi.org/10.1111/j.1758-5899.2012.00169.x.
[17] OECD, Harmful Tax Practices, https://www.oecd.org/en/topics/harmful-tax-practices.html (last visited June 16, 2026); OECD, Harmful Tax Practices—2018 Progress Report on Preferential Regimes: Inclusive Framework on BEPS: Action 5, OECD/G20 Base Erosion & Profit Shifting Project (OECD Publ’g 2018), https://doi.org/10.1787/9789264311480-en; OECD, Substantial Activities in No or Only Nominal Tax Jurisdictions: Additional Guidance for the Spontaneous Exchange of Information and Opt-In Notification Template 7 (2021), https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/harmful-tax-practices/substantial-activities-in-no-or-only-nominal-tax-jurisdictions-guidance.pdf.
[18] Council of the Eur. Union, Criteria for Establishing the EU List of Non-Cooperative Jurisdictions for Tax Purposes (last reviewed Jan. 11, 2024), https://www.consilium.europa.eu/en/policies/eu-list-of-non-cooperative-jurisdictions/criteria; Council of the Eur. Union, EU List of Non-Cooperative Jurisdictions for Tax Purposes (last reviewed Feb. 17, 2025), https://www.consilium.europa.eu/en/policies/eu-list-of-non-cooperative-jurisdictions.
[19] OECD, Tax Challenges Arising from Digitalisation of the Economy—Global Anti-Base Erosion Model Rules (Pillar Two) (Dec. 2021).
[20] Press Release, Republican Members of the U.S. House Comm. on Ways & Means, At OECD, Chairman Smith Warns That Congress Will Reject New Job-Killing Global Tax Surrender (Sept. 1, 2023), https://waysandmeans.house.gov/2023/09/01/at-oecd-chairman-smith-warns-that-congress-will-reject-new-job-killing-global-tax-surrender.
[21] OECD/G20 Inclusive Framework on BEPS, Side-by-Side Package (Jan. 5, 2026), https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/global-minimum-tax/side-by-side-package.pdf; see also Gary Clyde Hufbauer, How US Multinationals Escaped the Global Minimum Corporate Tax, Peterson Inst. for Int’l Econ. (July 7, 2025), https://www.piie.com/blogs/realtime-economics/2025/how-us-multinationals-escaped-global-minimum-corporate-tax.
[22] OECD, Multilateral Convention to Implement Amount A of Pillar One (Oct. 11, 2023), https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/cross-border-and-international-tax/multilateral-convention-to-implement-amount-a-of-pillar-one.pdf.
[23] G.A. Res. 78/230, U.N. Doc. A/RES/78/230 (Dec. 22, 2023); G.A. Res. 79/235, U.N. Doc. A/RES/79/235 (Dec. 24, 2024); Jonathan Shrier, U.S. Deputy Representative to the U.N. Econ. & Soc. Council, Explanation of Vote on the United Nations Framework Convention on International Tax Cooperation (Aug. 16, 2024), U.S. Mission to the U.N., https://usun.usmission.gov/explanation-of-vote-on-the-united-nations-framework-convention-on-international-tax-cooperation; Foreign, Commonwealth & Dev. Off. & Tara Soomro, Ambassador to ECOSOC, This Resolution Did Not Provide Sufficient Reassurance for Our Concerns: UK Explanation of Vote at the UN Second Committee (Nov. 27, 2024), https://www.gov.uk/government/speeches/this-resolution-did-not-provide-sufficient-reassurance-for-our-concerns-uk-explanation-of-vote-at-the-un-second-committee.
[24] Tsang, supra note 1.
[25] Åsa Johansson, Christopher Heady, Jens Arnold, Bert Brys & Laura Vartia, Taxation and Economic Growth, OECD Econ. Dep’t, Working Paper No. 620, 11–14 (2008); see also OECD, Tax Policy Reform and Economic Growth 18–19 (2010).
[26] Simeon Djankov, Tim Ganser, Caralee McLiesh, Rita Ramalho & Andrei Shleifer, The Effect of Corporate Taxes on Investment and Entrepreneurship, 2 Am. Econ. J.: Macroeconomics 31 (2010).
[27] Terry Shevlin, Lakshmanan Shivakumar & Oktay Urcan, Macroeconomic Effects of Corporate Tax Policy, 68 J. Acct. & Econ. 101233 (2019), https://www.sciencedirect.com/science/article/abs/pii/S0165410119300205.
[28] Id.
[29] Christina D. Romer & David H. Romer, The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks, 100 Am. Econ. Rev. 763 (2010).
[30] Karel Mertens & Morten O. Ravn, The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States, 103 Am. Econ. Rev. 1212 (2013).
[31] Tibor Hanappi, Valentine Millot & Sébastien Turban, How Does Corporate Taxation Affect Business Investment? Evidence from Aggregate and Firm-Level Data, OECD Econ. Dep’t, Working Paper No. 1765 (2023), https://doi.org/10.1787/04e682d7-en.
[32] Michael Christl & Monika Köppl-Turyna, Competitiveness of the Tax System and Economic Growth, Glob. Lab. Org. Discussion Paper No. 1754 (2026), https://www.econstor.eu/bitstream/10419/340903/1/GLO-DP-1754.pdf.
[33] Era Dabla-Norris & Frederico Lima, Macroeconomic Effects of Tax Rate and Base Changes: Evidence from Fiscal Consolidations, IMF Working Paper No. WP/18/220 (2018), https://www.imf.org/-/media/files/publications/wp/2018/wp18220.pdf. This accords with broader findings on tax rates. See, e.g., Eric Engen & Jonathan Skinner, Taxation and Economic Growth, 49 Nat’l Tax J. 617 (1996) (concluding that a 5-percentage-point reduction in marginal tax rates would increase long-run annual GDP growth by 0.2 to 0.3 percentage points).
[34] Arnold C. Harberger, The Incidence of the Corporation Income Tax, 70 J. Pol. Econ. 215 (1962).
[35] Wiji Arulampalam, Michael P. Devereux & Giorgia Maffini, The Direct Incidence of Corporate Income Tax on Wages, 56 Eur. Econ. Rev. 1038 (2012).
[36] Clemens Fuest, Andreas Peichl & Sebastian Siegloch, Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany, 108 Am. Econ. Rev. 393 (2018).
[37] Christophe Chamley, Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives, 54 Econometrica 607 (1986); Kenneth L. Judd, Redistributive Taxation in a Simple Perfect Foresight Model, 28 J. Pub. Econ. 59 (1985).
[38] OECD, The Role and Design of Net Wealth Taxes in the OECD, OECD Tax Pol’y, Stud. No. 26 (2018). Of the 12 European countries that imposed annual net wealth taxes in 1990—Austria, Denmark, Finland, France, Germany, Iceland, Italy, Luxembourg, the Netherlands, Spain, Sweden, and Switzerland—nine later repealed them: Austria (1994), Denmark (1997), Germany (1997), the Netherlands (2001), Finland (2006), Iceland (2006), Luxembourg (2006), Sweden (2007), and France (2017). See id. at 15–20; see also PricewaterhouseCoopers, Net Wealth/Worth Tax Rates (2026), https://taxsummaries.pwc.com/quick-charts/net-wealth-worth-tax-rates (last visited June 8, 2026).
[39] Tiebout, supra note 2.
[40] Dhammika Dharmapala & James R. Hines Jr., Which Countries Become Tax Havens?, 93 J. Pub. Econ. 1058 (2009); James R. Hines Jr. & Eric M. Rice, Fiscal Paradise: Foreign Tax Havens and American Business, 109 Q.J. Econ. 149 (1994).
[41] Judith Tyson, International Financial Centres and Development Finance (ODI Glob. 2021), https://www.econstor.eu/bitstream/10419/193660/1/106743190X.pdf.
[42] Paddy Carter, Why Do Development Finance Institutions Use Offshore Financial Centres? (ODI Glob. Oct. 2017), https://odi.org/en/publications/why-do-development-finance-institutions-use-offshore-financial-centres.
[43] Michael P. Devereux, Rachel Griffith & Alexander Klemm, Corporate Income Tax Reforms and International Tax Competition, 35 Econ. Pol’y 449 (2002); Ruud A. de Mooij & Sjef Ederveen, Taxation and Foreign Direct Investment: A Synthesis of Empirical Research, 10 Int’l Tax & Pub. Fin. 673 (2003); OECD, Corporate Tax Statistics 20–24 (2023); Tax Found., Corporate Tax Rates Around the World (2023) (showing the GDP-weighted average corporate tax rate fell from about 47% in 1980 to about 23% in 2023).
[44] OECD, Corporate Tax Statistics, supra note 44, at 20–24.
[45] Ruud A. de Mooij & Sjef Ederveen, Corporate Tax Elasticities: A Reader’s Guide to Empirical Findings, 24 Oxford Rev. Econ. Pol’y 680 (2008).
[46] Romer & Romer, supra note 30.
[47] OECD, Revenue Statistics 2023 15–18 (2023). Between 1965 and 2022, the unweighted average tax-to-GDP ratio across OECD countries rose from about 24.9% to 34.0%.
[48] Inst. for Fiscal Stud., Income Tax Explained, IFS TaxLab (Nov. 22, 2023), https://ifs.org.uk/taxlab/taxlab-taxes-explained/income-tax-explained.
[49] Cong. Budget Off. (CBO), The Distribution of Household Income 2022 (2026), https://www.cbo.gov/publication/62300.
[50] See, e.g., Armen A. Alchian & Harold Demsetz, Production, Information Costs, and Economic Organization, 62 Am. Econ. Rev. 777, 777–95 (1972); Michael C. Jensen & William H. Meckling, Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, 3 J. Fin. Econ. 305, 305–60 (1976); Eugene F. Fama, Agency Problems and the Theory of the Firm, 88 J. Pol. Econ. 288, 288–307 (1980); Eugene F. Fama & Michael C. Jensen, Separation of Ownership and Control, 26 J.L. & Econ. 301, 301–25 (1983).
[51] See, e.g., Anthony Downs, Inside Bureaucracy (Little, Brown & Co. 1967); William A. Niskanen Jr., Bureaucracy and Representative Government (Aldine-Atherton 1971); Barry R. Weingast & Mark J. Moran, Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission, 91 J. Pol. Econ. 765, 765–800 (1983); Mathew D. McCubbins & Thomas Schwartz, Congressional Oversight Overlooked: Police Patrols Versus Fire Alarms, 28 Am. J. Pol. Sci. 165, 165–79 (1984).
[52] Timur Kuran & Cass R. Sunstein, Availability Cascades and Risk Regulation, 51 Stan. L. Rev. 683 (1999).
[53] For a detailed and insightful account of the competing interests among politicians, bureaucrats, businesses, and the OECD in international tax policy, see Andrew P. Morriss & Lotta Moberg, Cartelizing Taxes: Understanding the OECD’s Campaign Against “Harmful Tax Competition”, 4 Colum. J. Tax L. 1 (2012), https://scholarship.law.tamu.edu/facscholar/53.
[54] Dan Neidle, Has Britain Run Out of Other People to Tax?, Tax Pol’y Assocs. (June 5, 2026), https://taxpolicy.org.uk/2026/06/05/taxing-other-people-uk.
[55] Philipp Genschel, Globalization, Tax Competition, and the Welfare State, 30 Pol. & Soc’y 245 (2002).
[56] Morriss & Moberg, supra note 54
[57] Michael P. Devereux, Ben Lockwood & Michela Redoano, Do Countries Compete over Corporate Tax Rates?, 92 J. Pub. Econ. 1210 (2008); Michael P. Devereux, Developments in the Taxation of Corporate Profit in the OECD Since 1965: Rates, Bases and Revenues, Oxford Univ. Ctr. for Bus. Tax’n, Working Paper No. 07/04 (2007).
[58] See Morriss & Moberg, supra note 54.
[59] OECD, Issues in International Taxation No. 1: International Tax Avoidance and Evasion 11 (1987).
[60] Id.
[61] The OECD’s founding convention defines its mission as: “(a) to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus contribute to the development of the world economy; (b) to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and (c) to contribute to the expansion of world trade on a multilateral non-discriminatory basis in accordance with international obligations.” OECD, Convention on the Organisation for Economic Co-operation and Development art. 1 (Dec. 14, 1960), https://www.oecd.org/en/about/legal/text-of-the-convention-on-the-organisation-for-economic-co-operation-and-development.html.
[62] Morriss & Moberg, supra note 54, at 4.
[63] See, e.g., Tax Just. Network et al., The State of Tax Justice 2020: Tax Justice in the Time of COVID-19 (2020); Esmé Berkhout, Oxfam, Tax Battles: The Dangerous Global Race to the Bottom on Corporate Tax (2016); Sally Golding et al., Tax Justice Advocacy: A Toolkit for Civil Society (Christian Aid 2011); Christian Aid, Death and Taxes: The True Toll of Tax Dodging (2008); Glob. All. for Tax Just., Tax Justice at the World Social Forum (Aug. 2, 2016); Tax Just. Network, Tax Competition and the Race to the Bottom (2020).
[64] FACT Coal., Coalition Members and Supporters, https://thefactcoalition.org/about-us/coalition-members-and-supporters (last visited June 18, 2026).
[65] Pub. Servs. Int’l (PSI), Tax Programme, https://publicservices.international/resources/page/tax?id=9469 (last visited June 18, 2026). PSI established the Network of Unions for Tax Justice (NUTJ) in 2022, which includes more than 30 trade unions across four continents. PSI is also a founding member of the Independent Commission for the Reform of International Corporate Taxation (ICRICT).
[66] Int’l Trade Union Confederation (ITUC), Tax Justice Is Workers’ Justice (2023). In 2015, the Dutch trade-union federation FNV funded a two-year PSI project with affiliate unions in Ghana focused on tax justice.
[67] Ford Found., Grants Database (Grant No. 106264) (awarding Tax Justice Network Ltd. £532,500 (2016–17) and $2,000,000 (2018)); Norad, Combating Fiscal Fraud and Empowering Regulators Programme (£655,200); Eur. Comm’n, Combating Fiscal Fraud and Empowering Regulators Programme (£619,160); Open Soc’y Found., Grant to Tax Just. Network ($180,000 (2019)); Adessium Found., Grant to Tax Just. Network (£261,000 (2017)); Wallace Glob. Fund, Grants to Tax Just. Network ($40,000 annually (2018–19)); Ford Found., Grants Database (Grant No. 128687) (awarding Glob. All. for Tax Just. $505,000 (2017–19)).
[68] Eur. Comm’n, Directorate-Gen. for Tax’n & Customs Union, EU Tax Observatory Establishment Grant (€1.2 million (2020–21)); see also Paris Sch. of Econ., EU Tax Observatory, https://www.taxobservatory.eu (last visited June 18, 2026).
[69] Christopher Snowdon, Sock Puppets: How the Government Lobbies Itself and Why (Inst. of Econ. Aff. 2012).
[70] Julian Morris, Updated Survey of the “Profit Misalignment” Literature (on file with author and available on request, Mar. 2026). See, e.g., Alex Cobham & Petr Janský, Measuring Misalignment: The Location of US Multinationals’ Economic Activity Versus the Location of Their Profits, 37 Dev. Pol’y Rev. 91 (2019). Janský is a researcher at Charles University, a coauthor of the Tax Justice Network’s Corporate Tax Haven Index, and a named adviser to the Tax Justice Network’s State of Tax Justice 2020. The concept of “profit misalignment” derives from Alex Cobham & Simon Loretz, International Distribution of the Corporate Tax Base: Implications of Different Apportionment Factors Under Unitary Taxation (Int’l Ctr. for Tax & Dev. Nov. 2014).
[71] Indep. Comm’n for the Reform of Int’l Corp. Tax’n (ICRICT), About Us: The Coalition, https://www.icrict.com/about-us/the-coalition (last visited June 18, 2026).
[72] ICRICT, About Us: What’s ICRICT?, https://www.icrict.com/about-us (last visited June 18, 2026).
[73] ICRICT, Evaluation of the Independent Commission for the Reform of International Corporate Taxation for the Base Erosion and Profit-Shifting Project of the G20 and OECD (Oct. 2015), https://www.icrict.com/reports/icrict-beps-evaluation.
[74] ICRICT, ICRICT’s Statement on the Negotiation of a UN Framework Convention on International Tax Cooperation (UN FCITC) (Feb. 3, 2025), https://www.icrict.com/corporate-taxation/icricts-statement-on-the-negotiation-of-a-un-framework-convention-on-international-tax-cooperation-un-fcitc.
[75] Johansson et al., supra note 26.
[76] Tiebout, supra note 2.
[77] Freedom House, Freedom in the World 2025: The Human Cost of Democratic Decline (Feb. 2025), https://freedomhouse.org/sites/default/files/2025-02/FITW_World_2025_Feb.2025.pdf.