The Dynamics of Global Economic Governance
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The Dynamics of Global Economic Governance

The Financial Crisis, the OECD, and the Politics of International Tax Cooperation

Richard Eccleston

This book focuses on international taxation and examines how the financial crisis prompted renewed attempts to enhance international tax transparency and confront tax havens. It highlights the complexity of international regime change and the significance of national and financial interests, international organizations, domestic politics and the emerging G20 leaders forum in this process.
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Chapter 5: The domestic politics of international tax cooperation in the United States and Switzerland

The Financial Crisis, the OECD, and the Politics of International Tax Cooperation

Richard Eccleston


Effective global governance is critically dependent on the support of key states, or a coalition of leading powers, especially when the governance problem concerned resembles what in Chapter 2 was defined as a collaboration problem (Rixen 2008; Rosenzweig 2011). Given that international tax governance clearly exhibits these characteristics, together with the fact that political support for international tax cooperation among key actors in the regime has fluctuated in recent years, it is necessary to analyse the ways in which domestic political variables influence state interests and policy preferences in the international tax arena (Drezner 2007). This chapter provides important insights into the domestic politics of international tax cooperation through case studies of two of the most significant states in the international tax regime, the United States and Switzerland. These two cases have been selected on the basis of the historical analysis presented in Chapters 1 and 3. This analysis highlighted the fact that the United States frequently played a critical leadership role in international tax cooperation during the twentieth century by virtue of its position as the world’s largest and most powerful economy, hosting the world’s most significant capital markets, but also because it is the largest financial contributor to the OECD (Woodward 2009; Carroll and Kellow 2011, 128–33). Given this combination of structural power and historical leadership within the regime, Chapter 3 concluded that US support is best regarded as being a necessary but insufficient condition for effective international tax cooperation and, as such, it is important to assess the relationship between domestic politics and changing US international tax policy preferences.

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