Rising tax competition

In Fixing U.S. International Taxation, I emphasize the question of what countries should do about their international tax rules if acting unilaterally - that is, in the absence of strategic interactions with other countries ranging from cooperation to retaliation (as under a tit-for-tat strategy).  This reflects my considering the unilateral scenario as very important, and as not having previously been either given enough attention or adequately analyzed.  But I hold no definite brief against either the feasibility or the desirability of cooperation.

Meanwhile the OECD's BEPS project has been going on, reflecting efforts at the achievement of broad multilateral cooperation that, as I am careful to say in the book, both (a) can change the relevant policy calculus and (b) is great if it can be pulled off.  But I do admittedly express a bit of mild skepticism on the latter score.

Today's Reuters has an article by Tom Bergin that throws a bit of cold water on cooperative hopes, at least in one particular setting.  Bergin notes that the UK's recent shift towards engaging in tax competition, and perhaps even towards competing with Ireland for popularity with US companies as an appealing tax haven, has not gone unnoticed by those companies.

As a small country, the UK certainly has good reason to consider approaching international tax policy in this way.  And the US, if inclined to complain, does not have entirely clean hands itself.  (Thus, consider how our check-the-box rules have helped US companies reduce their tax liabilities in EU countries, leading to a bit of finger-pointing by people in the EU but accompanying US reluctance to do anything about it.)  But the UK's taking this approach is certainly not great for the US, in particular if we want to rein in tax planning by our multinationals on either a unilateral or a multilateral basis, given that the UK is one of the best substitutes out there for US legal activity (common language, similar legal systems, geographically closer to us than most countries outside of the Americas, etc.).