Description
Why did the US government (not) cooperate on multilateral corporate taxation during Trump’s
first term? Based on exclusive interview material with senior tax bureaucrats, this paper
provides a descriptive account of the preference formation within the US Treasury Department regarding the OECD’s Base Erosion and Profit Shifting (BEPS) project during Trump’s first term. The account shows that US tax bureaucrats not only successfully advocated for multilateral negotiations within their own government, but also participated constructively in the multilateral negotiations at the OECD, despite a growing conflict with the US Treasury Secretary, the White House and domestic business representatives. Although the US tax bureaucrats were not allowed to agree on a final draft, they paved the way for the successful agreement a year later under the Biden presidency. The case study describes the interplay between domestic factors such as party politics and public opinion with structural power and epistemic communities. In contrast to game theory models that treat state preferences as given, and in addition to studies that identified the global diffusion of digital taxes as a decisive exogenous factor, this study highlights the need to analyse (government) preferences regarding multilateral cooperation as part of a political process.
