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Coercion in international tax cooperation: identifying the prerequisites for sanction threats by a great power

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  • Lukas Hakelberg

Abstract

Tax cooperation puts offshore centers worse off, as their compensation for forgone profits is a hard political sell, and unlikely to produce the same spillover effects on wages and employment as the attraction of foreign tax base. Coercion by a great power thus seems to be a prerequisite for successful international cooperation in tax matters. Great power status is based on internal market size. Governments become substantially more likely to use this power through sanction threats against tax havens when two factors coincide: (1) domestic constraints preventing a shift of the tax burden to labor and consumption and (2) scope for redistributive cooperation benefitting great power banks or multinationals. Hypotheses are tested in an analysis of tax negotiations at OECD level between 1996 and 2014.

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  • Lukas Hakelberg, 2016. "Coercion in international tax cooperation: identifying the prerequisites for sanction threats by a great power," Review of International Political Economy, Taylor & Francis Journals, vol. 23(3), pages 511-541, May.
    • Handle: RePEc:taf:rripxx:v:23:y:2016:i:3:p:511-541
    DOI: 10.1080/09692290.2015.1127269
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    Cited by:

    1. Panagiotis Delimatsis & Bernard Hoekman, 2017. "National Tax Regulation, International Standards and the GATS: Argentina—Financial Services," RSCAS Working Papers 2017/42, European University Institute.
    2. Lukas Hakelberg & Max Schaub, 2018. "The redistributive impact of hypocrisy in international taxation," Regulation & Governance, John Wiley & Sons, vol. 12(3), pages 353-370, September.
    3. Sheila Killian & Philip O'Regan & Ruth Lynch & Martin Laheen & Dionysios Karavidas, 2022. "Regulating havens: The role of hard and soft governance of tax experts in conditions of secrecy and low regulation," Regulation & Governance, John Wiley & Sons, vol. 16(3), pages 722-737, July.
    4. Hearson, Martin, 2018. "Transnational expertise and the expansion of the international tax regime: imposing ‘acceptable’ standards," LSE Research Online Documents on Economics 88351, London School of Economics and Political Science, LSE Library.
    5. Lips, Wouter, 2018. "Great powers in global tax governance: a comparison of the US role in the CRS and BEPS," SocArXiv ewd3j, Center for Open Science.
    6. Joana Andrade Vicente, . "Arguments for implementing formulary apportionment in the European Union," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    7. Lips, Wouter, 2019. "The EU Commission’s Digital Tax Proposals and its Cross-platform Impact in the EU and the OECD," SocArXiv k2t9j, Center for Open Science.
    8. Joana Andrade Vicente, 2021. "Tax us, if you can: a game theoretic approach to profit shifting within the European Union," Working Papers REM 2021/0206, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    9. Fatemi, Darius & Kim, Jang-Chul, 2024. "Information asymmetry in non-US stocks: The compounding and mitigating effects of tax havens and corruption," Global Finance Journal, Elsevier, vol. 59(C).

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