Twilight of the International Consensus: How Multinationals Squandered Their Tax Privileges


In September 2013, Exxon Mobil Corp. announced it would recognize gay marriage for its employees. This was front-page news, right up there with a New Jersey Supreme Court judge telling the state it had to do the same. Why? Because Exxon is a politically conservative oil company that makes most of its political donations to Republicans? No, because Exxon is such a huge non-state actor that anything it does is tantamount to a government action.

In The Power Elite, C. Wright Mills cogently explained how giant multinational corporations had escaped the writ of national governments. Exxon is one of the world’s ten largest multinational corporate groups measured by market value. At the time of this writing, nine companies on that list were American, along with around half of the fifty. Some of the world’s largest companies pay very little tax anywhere in the world. But to their home governments, they are often national champions.

Some other countries’ multinationals are unfairly skipping-out on their corporate tax obligations to Organization for Economic Cooperation and Development (OECD) member and observer countries. That was the genesis of the OECD Base Erosion and Profit Shifting project (BEPS), which has produced an action plan designed to repair and preserve the fragile international consensus in the short run, but may end up upsetting it in the long run. In the long run, the international consensus is dead, and everyone knows it; but BEPS has to be tried and allowed to fail first.

This Essay addresses issues with taxing multinationals and how they abuse their tax privileges. Further, this Essay discusses how BEPS must run its course and how a new international consensus is necessary to combat the shortfalls of BEPS.


multinational corporate group, OECD, BEPS, international consensus, corporate tax base, separate company accounting, intangibles holding companies, supply chain restructuring, permanent establishment, byte tax, controlled foreign corporation, hybrid entity, subject-to-tax clause, international tax



Lee A. Sheppard



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