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A Wish for the Future of International Tax Cooperation

Posted on Jan. 3, 2022
Allison Christians
Allison Christians

Allison Christians is the H. Heward Stikeman Chair in Tax Law at McGill University in Montreal, where she writes and teaches national and international tax law and policy. You can follow her on the Tax, Society, & Culture blog at www. or on Twitter (@profchristians).

In this installment of The Big Picture, Christians considers the governance structure underlying the international tax framework and argues that the world would benefit from its fundamental transformation into a randomized and more equitable leadership structure, whether through existing institutions like the OECD’s inclusive framework, or a new body such as a global forum on tax governance.

By some accounts, the past year was momentous — some say transformative — in the life of the international tax system. The apex: an agreement in principle among some 140 countries on the design of a global minimum tax regime for some large multinationals. But has the system truly been transformed by the events of 2021? The continuation of its underlying governance structure casts some doubt. To that end, I offer a wish for the future of international tax: the adoption of a “lottocracy” in international tax relations.

A lottocracy is a system of democratic governance by lottery. Also referred to as sortition (selection by random sample) or aleatoric democracy (governance via chance or indeterminate components), the core idea is that once a polity has been formed (such as in the form of a state or, in the international tax context, a society of states), all competent participants should have an equal chance to lead. The approach derives from Aristotle’s view that those who are equal in any respect must be equal absolutely, a principle that in turn entitles all to claim equal participation in decision-making.

Equal participation is (still) an emerging theme at the OECD, which has been at the center of international tax policymaking for 50 years. In 2014, with external pressure building to move the seat of power elsewhere, the OECD constituted the inclusive framework to implement its base erosion and profit-shifting project and began speaking regularly of an “equal footing” for all nations participating in international tax relations under its governance structure. While the OECD never clearly defined the equal footing metaphor — and many have observed its breach in practice — adopting a lottocracy in tax governance could bring some much-needed content to the concept.

Randomized Leadership

For a polity like a state, a lottocracy means rule by citizens chosen at random. Fully realized, those citizens chosen by lottery — lottocrats — would substitute for an elected legislature. A more intermediate form of lottocracy might have lottocrats working alongside existing legislative bodies, or serving as stand-alone, single-issue legislatures to resolve specific issues on an ad hoc basis. Lottocracies have served as successful forms of democratic decision-making in situations dating back to the selection of magistrates in Athens and persisting through to the present day in the common law jury selection system, citizens’ assemblies, single-issue legislatures, and other participatory action research efforts.

Applied to the international tax system, a lottocracy would probably have to be deployed within, or possibly among, existing tax policymaking institutions because a reliable financial and administrative infrastructure is a prerequisite to ensure that lottocrats can fulfill their functions. An inescapable threshold task is therefore identifying the possible institutional candidates and choosing one among them to lead the way. That choice is itself a governance decision: Deciding who should decide is an infinite regress.

Launch Point: OECD

A practical answer is that because the OECD is poised to continue its leadership on tax policymaking, it is a logical candidate to launch a lottocratic governance structure in some form. Beyond its policy leadership, the OECD is a good candidate precisely because it has voluntarily reformed its approach to governance in the recent past — notably, as reflected in the various expanded networks it has created in specified issue areas, such as exchange of information, transfer pricing, VAT, and BEPS. It might not therefore be too much of a stretch to consider how the OECD could incorporate lottocratic governance in international tax relations. In particular, it seems plausible to launch a lottocratic structure with the society of states constructed to implement global tax policymaking on BEPS — namely, the inclusive framework.

In skeletal terms, adopting a lottocratic governance model would mean that those tasked with leadership would not be appointed within or by the OECD secretariat but would instead be chosen by lot from a pool of candidates from all the participating nations. Candidates would presumably be placed in the pool by participating nations according to their own internal criteria (perhaps also by lottocratic selection). The OECD secretariat’s role would be to support the lottocrats as they engage in agenda setting, research gathering with input from experts, community consultation, deliberation and discussion, report writing, and perhaps even voting on a positional document that would then be presented to all other participating nations as the consensus position.

The delegation of some or all of those tasks to a randomly selected body might seem like a radical concept, but the critiques of the status quo tax cooperation process are as valid as the literature on lottocracy is persuasive. Selection by lot could improve decision-making, reduce the entrenchment of historical factions, and instill a sense of legitimacy in a process that involves a worldwide polity.

A Global Forum on Tax Governance

If it feels too experimental to ask the OECD to launch lottocratic governance all at once, or even in a discrete area of substantive tax law, there is perhaps an even more compelling use case — namely, a new global forum on tax governance. Governance is a substantive area that deserves study and collaborative problem-solving with the same intensity as any other area of tax norm formulation. Attention to governance is a primary function of international institutions, even if the architects are not always explicit about their governance decisions or the implications thereof. Decisions about governance influence the acceptability of rules, norms, and standards both within and beyond those privileged enough to have been directly involved in the decision-making.

In 1919, writing about the governance task that was then being taken up by the League of Nations, Frederick Pollock wrote:

Our problem is to lay down constructive lines for the working institutions with which the general idea must be clothed in order to become a power capable of establishing a restored, amplified, and effectual law of nations on a sure footing. The old methods of custom and voluntary convention sanctioned by undefined general opinion have broken down: the new law demands a seat of justice and judgement.1

The same sentiments ought to inform the OECD today. As is well known among international tax scholars, while the League of Nations was disbanded and reconstituted as the United Nations, its tax work was largely continued by the great powers through the OECD, with the United Nations historically taking a lesser role. The consequences of those institutional choices have reached through the ages and never been satisfactorily addressed, so they will continue to dominate the future of international tax cooperation. Adopting a global forum on tax governance that experiments with lottocracy even as it examines the ways in which past international tax decision-making has occurred would be truly transformative.

At best, adopting lottocratic governance might satisfy the democracy and legitimacy deficits that many observe to be persistent features of international tax relations. But even at worst, studying the merits of lottocracy and its implementation in global tax governance would be an opportunity to build governance around governance in its own right. That involves examining the design of the institutions and processes used to develop consensus on international tax law standards, norms, and guidance in a structured way. All the critiques leveled at past and ongoing institutional design choices would presumably also apply to this new governance structure: Building governance will not eliminate critique of any institution involved in international tax cooperation. Rather, building governance around governance would illuminate the governance assumptions and omissions of the past to help us understand how we might build better institutions and processes for the future.

It is perhaps historically interesting that 2021 marked a century since the League of Nations first tasked a group of four economists from four influential countries to report on the phenomenon of double taxation and how to prevent it through cross-border tax cooperation. The institution-building that followed the economists’ report created the international tax system as we know it today: a transnational order of laws, norms, and consensus-building institutions and processes. It is a chaotic and haphazard order in some respects, but a steadfast and consistent one in others — whether ultimately for better or worse is for each observer to judge. It was built by a group of geopolitically influential nations all fundamentally characterized by their commitment to democratic decision-making processes, but their institutional choices have inconsistently reflected the same commitment. International tax cooperation’s track record has been characterized by multiple rounds of reform, varying levels of convergence and divergence, and increasingly insistent calls for institutional governance-level reform that have largely been met with metaphors.

If 2021 was momentous in substantive tax reform terms, it was not nearly transformative enough in governance terms. Let 2022 be the year we reset our assumptions for the institutions and processes of international tax governance.


1 Pollock, League of Nations and the Coming Rule of Law (1919).


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