Transcript: Is Global Tax Reform Possible? | Apr 28, 2021

Steve sits in a room with white walls, a low slanted ceiling and several framed pictures on the walls including one of Walter Kronkite. He's slim, clean-shaven, in his fifties, with short curly brown hair. He's wearing a white shirt and a black tie.

A caption on screen reads "Is global tax reform possible?"

Steve says AFTER CITING WHAT SHE SAID WAS A "30-YEAR RACE TO THE BOTTOM," U.S. TREASURY SECRETARY JANET YELLEN HAS CALLED FOR GLOBAL CORPORATE TAX REFORM. WITH US FOR SOME PERSPECTIVE ON SUCH AN INITIATIVE, WE'RE JOINED BY: IN MONTREAL, QUEBEC: ALLISON CHRISTIANS, A PROFESSOR AND CHAIR OF TAX LAW AT MCGILL UNIVERSITY...

Allison is in her forties, with long brown hair. She's wearing a black sweater.

Steve continues WE HAVE TO START WITH THIS. WE HAVE TO START WITH YOU SHOWING US THE MUG YOU JUST TOOK A DRINK OF COFFEE FROM. C'MON NOW, THAT'S JUST FABULOUS.

Allison raises a mug that reads "I love tax law" then says WELL, I REALLY DO LOVE TAX LAW.

[LAUGHTER]

Steve says SO WE'VE GOT THE RIGHT PERSON FOR THIS INTERVIEW CLEARLY. THAT'S GREAT.

Allison says YEAH.

Steve says IT'S GREAT TO MEET YOU AND THANKS FOR COMING ON THE PROGRAM TONIGHT. I WANT TO START BY JUST READING SOMETHING FROM THE ECONOMIST FROM APRIL 9TH, JUST A LITTLE BIT EARLIER THIS YEAR, AND THE QUOTE IS...

A quote appears on screen. It reads "According to the Tax Foundation, a think-tank, average corporate-tax rates around the world have plummeted from 40 percent in 1980 to 24 percent in 2020."

Steve says LET'S JUST START WITH SOME BACKGROUND HERE. WHY DID THAT HAPPEN?

The caption changes to "Allison Christians. McGill University."

Allison says THAT'S A GREAT QUESTION AND A GREAT PLACE TO START. LET'S START WITH HOW DID WE GET HERE? SO, YOU KNOW, TAX RATES USED TO BE A LOT HIGHER, AND THEY HAVE BEEN SINKING, THEY HAVE BEEN DROPPING, AND THE RACE TO THE BOTTOM IS SOMETHING PEOPLE HAVE TALKED ABOUT FOR A LONG TIME. SO, YOU KNOW, WHY IS THAT? WELL, A LITTLE THING CALLED GLOBALIZATION CAME ALONG, RIGHT? AND CAPITAL BECAME MOBILE. AND WHEN IT WAS POSSIBLE TO INVEST ANYWHERE, PRETTY SOON DIFFERENT GOVERNMENTS AROUND THE WORLD WERE TRYING TO GET THAT FOREIGN INVESTMENT INTO THEIR BORDERS. AND THEY USED EVERY REGULATORY TOOL AVAILABLE TO THEM, AND THE TAX SYSTEM IS ONE VERY TEMPTING REGULATORY TOOL TO INCENTIVIZE DIFFERENT BEHAVIOURS.

Steve says I GUESS WE CAN ASSUME THAT THE CORPORATIONS LOVE PAYING LOWER TAX RATES. THAT'S WONDERFUL FOR THEM. BUT IN TERMS OF SOCIETY AS A WHOLE, HAS IT BEEN A GOOD THING?

The caption changes to "Allison Christians, @profchristians."

Allison says YEAH. I MEAN, THAT'S THE QUESTION FOR THE AGES AND WHY IT COMES UP IN EVERY POLITICAL DISCUSSION, YOU KNOW, EVER, IN EVERY ELECTION PRACTICALLY, WE HAVE THESE DISCUSSIONS. SO, YOU KNOW, WHY DON'T CORPORATIONS WANT TO PAY TAX? WELL, CORPORATIONS DON'T WANT ANYTHING, RIGHT, BECAUSE THEY'RE NOT THINKING, SENTIENT BEINGS BUT THEY'RE AN AMALGAMATION OF PEOPLE AND ASSETS AND ACTIVITIES. THE PEOPLE WHO RUN CORPORATIONS HAVE IDEOLOGIES ABOUT WHAT ARE THEIR OBJECTIVES, AND THE OBJECTIVE HAS BEEN MAXIMIZING SH SH... SHAREHOLDER WEALTH, AND THAT HAS LED TO THE SORT OF NATURAL OR PERCEIVED WISDOM THAT THE OBJECT OF THE CORPORATION SHOULD BE TO REDUCE TAXES BY ANY MEANS NECESSARY. THIS IS OF COURSE AN IDEOLOGY, AND IT'S NOT QUITE ACCURATE BECAUSE WE ALSO HAVE, ON THE OTHER SIDE, THIS IDEA THAT CORPORATIONS ARE PART OF THE FABRIC OF SOCIETY. THEY RELY ON THE INFRASTRUCTURE THAT IS PAID FOR BY TAXATION. AND TAXATION IS NOT THROWING MONEY DOWN THE DRAIN, IT'S AN INVESTMENT, AN INVESTMENT IN FUTURE PRODUCTIVITY, IN FUTURE GAIN. SO WE HAVE THIS TUG-OF-WAR ALWAYS ON BOTH SIDES. WE WANT CORPORATIONS TO MAKE PROFITS, AND THEREFORE WE DON'T WANT TO BURDEN THEM TOO MUCH. ON THE OTHER HAND, WE NEED TO HAVE TAX REVENUES TO PAY FOR THE THINGS THAT MAKE IT POSSIBLE FOR BUSINESSES TO EXIST AND THRIVE. AND THOSE TWO GO IN DIFFERENT DIRECTIONS ALREADY, AND THEN WHEN YOU ADD GLOBALIZATION TO THAT MIX, NOW I THINK MOST OF THE TIME WE'RE CONSTANTLY GOING IN BOTH DIRECTIONS AT THE SAME TIME. WE'RE TRYING TO TAX, AND WE'RE ALSO TRYING TO GIVE AWAY TAX INCENTIVES. WE'RE TRYING TO RAISE REVENUE, AND WE'RE ALSO TRYING TO, YOU KNOW, PAVE THE ROAD TO, YOU KNOW, MAKING IT, YOU KNOW, SAFE FOR CORPORATIONS TO OPERATE HERE. YOU SEE THIS IN TAX COMPETITION.

Steve says LET'S SEE IF WE CAN GET A CLEARER PICTURE OF, I GUESS, WHO LED THE CHARGE FOR LOWER TAX RATES. AND WE HEAR A GREAT DEAL TODAY ABOUT THE FAANGs, FACEBOOK AND APPLE, NETFLIX, GOOGLE, ET CETERA. THEY'RE THE TECH GIANTS THAT LED THIS RACE TO THE BOTTOM. IS THAT ACCURATE?

Allison says WELL, NO. GOVERNMENTS LED THE RACE TO THE BOTTOM. THE RATE OF TAX IS NOT UP TO CORPORATIONS, IT'S UP TO GOVERNMENTS. AND OF COURSE, YOU KNOW, WE THINK THAT THE FAANGs GIVE US SOMETHING NEW, AND THEY DO. IT'S TRUE, THEY'RE REALLY HARD TO TAX FOR ALL DIFFERENT KINDS OF REASONS. BUT, YOU KNOW, EVERYBODY IS KIND OF HARD TO TAX FOR DIFFERENT KINDS OF REASONS, AND GOVERNMENTS HAVE TO FIGURE OUT WHERE TO SPEND THEIR TIME AND THEIR ENERGY. AND SO, YOU KNOW, WHERE DOES THE IMPETUS TO LOWER TAXES COME? IT COMES FROM A POLICY DECISION. AND THEN THE POLICY DECISION IS, WELL, HOW MUCH WILL IT TAKE, HOW MUCH EFFORT, ENERGY, AND MONEY WILL IT TAKE TO ENFORCE A COMPLEX SYSTEM, AND AS THE SYSTEM GETS MORE COMPLEX, WE HAVE TO POUR MORE INTO ENFORCING THAT. YOU KNOW, THOSE ARE ALL POLICY DECISIONS. SO IT'S NOT LIKE THERE'S THIS MASS OF CORPORATIONS OUT THERE THAT ARE JUST FOOTLOOSE AND NO ONE CAN CONTROL THEM. THAT'S NOT NECESSARILY THE CASE. I THINK GOVERNMENTS CAN CONTROL AND HAVE SHOWN THAT THEY CAN CONTROL CORPORATE BEHAVIOUR THROUGH LOTS OF DIFFERENT MEANS. BUT IT'S JUST A QUESTION OF, DO WE WANT TO EXPEND THE RESOURCES AND THE ENERGY TO CONTROL THEM, AND TAX IS ONE OF THOSE CONTROLS. YOU KNOW, YOU SEE IT IN OTHER AREAS LIKE LABOUR RESTRICTIONS AND ANTITRUST COMPETITIONS RESTRICTIONS. THOSE ARE ALL DIFFERENT WAYS TO TRY TO FIGURE OUT HOW MUCH FREEDOM OR HOW MUCH LIBERTY SHOULD WE GIVE THE CORPORATION IN THE FABRIC OF OUR SOCIETY? THESE ARE POLICY CHOICES.

Steve says WELL, HERE'S ONE REASON, AND I'LL GO BACK TO THAT ORIGINAL ECONOMIST ISSUE THAT I REFERENCED AT THE TOP. HERE'S ONE REASON WHY GOVERNMENTS MIGHT WANT TO GET A LITTLE MORE INTERESTED IN THAT, AND THAT THE ECONOMIST ESTIMATES... WELL, THE IRS MISSES OUT ON NEARLY 65 BILLION DOLLARS IN TAX REVENUE EVERY YEAR BECAUSE OF PROFITS BOOKED IN TAX HAVENS. OKAY. NOW IS OUR OPPORTUNITY, PROFESSOR, TO TEACH US. WHAT DOES THAT MEAN? HOW DOES THAT WORK? WHAT ARE THE IMPLICATIONS OF IT?

Allison says YEAH, THERE'S SO MUCH WRAPPED UP IN THAT. SO WE REALLY HAVE TO BE CAREFUL. I ACTUALLY DON'T LIKE THE WORDS TAX HAVEN BECAUSE IT IMPLIES THAT THERE IS SOME OTHER PLACE OVER THERE THAT'S DOING SOME BAD THING AND IF ONLY WE COULD STOP THOSE PEOPLE FROM DOING THAT BAD THING, THEN WE WOULD ALL BE LIVING IN PARADISE. AND THAT'S NOT THE CASE. THERE IS NO SUCH THING, IN MY MIND, AS A TAX HAVEN. THERE ARE TAX-FAVOURABLE RULES AND REGIMES IN ALMOST EVERY JURISDICTION, AND THE QUESTION IS, WELL, WHICH KIND? SO THERE ARE DIFFERENT KINDS. WE'RE WORRIED ABOUT DIFFERENT KINDS... WE'RE WORRIED ABOUT DIFFERENT KINDS IN DIFFERENT CONTEXTS. SO WE'RE WORRIED ABOUT SOME KINDS OF TAX REGIMES WHEN WE THINK WHAT'S HAPPENING IS TAX EVASION, LIKE PEOPLE HIDING MONEY IN AN OFFSHORE BANK ACCOUNT. BUT, YOU KNOW, THAT'S NOT REALLY WHAT'S GOING ON OR AT LEAST MOST OF THE TIME WHAT'S HAPPENING WITH GIANT MULTI-NATIONALS. THE KIND WE'RE NOW WORRIED ABOUT IS TAX-FAVOURABLE REGIMES THAT LURE IN CAPITAL, THAT LURE IN LEGAL FICTIONS AND THEN ASSOCIATE INCOME TO THEM. I KNOW THIS IS REALLY COMPLICATED AND IT'S KIND OF IN THE WEEDS, BUT HERE'S AN IDEA: GOOGLE, FOR EXAMPLE, THEIR BASE IS ADVERTISING. THIS IS HOW THEY MAKE THEIR MONEY, RIGHT? SO THEY HAVE A BRAND. AND THE BRAND IS SOMETHING THAT'S LEGALLY RECOGNIZED. IT'S A THING THAT WE CAN PUT A NAME TO. YOU KNOW, IP, INTELLECTUAL PROPERTY. AND SINCE IT'S SOMETHING LEGAL, WE CAN PUT IT ANYWHERE. AND THEN WHENEVER SOMEBODY HAS TO PAY FOR BRANDING, WE HAVE THAT MONEY GO TO WHERE WE SAID THAT INTELLECTUAL PROPERTY IS. SO OF COURSE THERE'S GOING TO BE LOTS OF DIFFERENT PLACES THAT WILL SAY, HEY, WE'LL TAKE THE IP, YOU CAN PUT IT HERE, YOU CAN PUT IT IN OUR JURISDICTION AND THEN ALL THE INCOME WILL COME TO US AND WE WON'T TAX IT. BUT IF YOU PUT IT OVER THERE, THEY'RE GOING TO TAX IT. SO THAT'S SORT OF THE BASIC STORY OF THE FAANGs IS THAT THEY'RE USING A LOT OF IP, INTELLECTUAL PROPERTY, A LOT OF IT IS HARD TO VALUE, WHAT WE CALL HARD-TO-VALUE INTANGIBLES. THEY CAN BE LOCATED ANYWHERE. AND JURISDICTIONS AROUND THE WORLD HAVE MADE IT THEIR BUSINESS TO MAKE THEIR PLACES BE THE PLACE WHERE THE FAANGs WANT TO PUT THOSE THINGS. AND WE THINK... YOU COULD THINK OF IRELAND AS THE EXEMPLARY, FOR EXAMPLE, FOR APPLE. BACK IN THE '80s, IRELAND LURED APPLE IN WITH A VERY LOW TAX RATE, AND IT WAS VERY SUCCESSFUL. OVER THE YEARS, PEOPLE HAVE BEEN LESS ACCEPTING OF THAT. YOU KNOW, AT THE TIME, IT WAS FINE. NOW, MAYBE WE'RE NOT SO SURE THAT IT IS FINE.

Steve says LET'S DO A "FOR INSTANCE" HERE. BECAUSE WE OFTEN HEAR, I THINK PEOPLE ON THE MORE PROGRESSIVE END OF THE POLITICAL SPECTRUM SAY THINGS LIKE: WE'VE GOT TO RAISE CORPORATE TAXES AND WE'VE GOT TO MAKE CORPORATIONS PAY THEIR FAIR SHARE. SO LET'S PLAY THAT OUT. IF GOVERNMENTS IN CANADA RAISE THE CORPORATE TAX RATE FROM, SAY, 15 percent TO 30 percent OVERNIGHT, JUST FOR THE HECK OF IT, WHAT WOULD BE THE IMPLICATIONS OF THAT?

Allison says YEAH, WELL, SO I ACTUALLY THINK THAT WE HAVE TO MAKE A LITTLE SIDE BAR HERE. IT REALLY TO ME IS SUCH A MISTAKE TO ONLY TALK ABOUT THE TAX RATE. AND I KNOW IT'S EXCITING AND INTERESTING AND EASY TO UNDERSTAND THAT A 15 percent TAX RATE SOUNDS LIKE A LOT BETTER THAN A 30 percent TAX RATE. BUT A 15 percent TAX RATE ON A VERY HIGH AMOUNT OF MONEY CAN BE MORE TAX THAN A 30 percent TAX RATE ON A SMALLER AMOUNT OF MONEY. SO YOU REALLY HAVE TO THINK ABOUT HOW DOES THE RATE INTERACT WITH THE TAX BASE. AND WHEN I SAY TAX BASE, WHAT I MEAN IS, LIKE, WHAT INCOME ARE WE GOING TO TAX WITH THAT TAX RATE? SO IF YOU SAY WE'RE GOING TO RAISE THE RATE OVERNIGHT TONIGHT FROM 15 TO 30 AND WE'RE NOT GOING TO CHANGE ANYTHING ELSE, THEN I THINK WE COULD SAY IT'S LIKELY THAT EVERYBODY WHO IS NOW SUBJECT TO THAT HIGHER RATE WILL START LOOKING AT WAYS TO MINIMIZE THE BASE, EVEN MORE THAN THEY DO NOW. SO IT PUTS PRESSURE ON THAT, ON THE TAX MANAGER, TO TRY TO FIGURE OUT, WELL, THIS 30 percent RATE IS NOT WHAT WE HAD FORECAST, IT'S NOT WHAT WE EXPECTED. CAN WE GET AWAY FROM IT SOMEHOW? SO YOU SORT OF SEE IN THE LITERATURE, THE HIGHER THE TAX RATE GOES, THE MORE LUCRATIVE IT IS TO GET OUT OF IT, AND THEREFORE, THE MORE LIKELY IT IS THAT TAX LAWYERS AND ACCOUNTANTS WILL BE CALLED IN TO HELP FIGURE OUT HOW TO MANAGE THAT HIGHER RATE.

Steve says SO THAT EXPLAINS HOW YOU CAN ACTUALLY HAVE A HIGHER RATE AND BRING IN LESS MONEY OR A LOWER RATE AND ACTUALLY BRING IN MORE MONEY; IS THAT RIGHT?

Allison says THAT'S THE IDEA, YEAH. SO THIS IDEA THAT... WE HAVE TO BE SO CAREFUL, RIGHT? BECAUSE THERE IS AN IDEA THAT A HIGHER RATE WILL ACTUALLY REDUCE TAX. BUT WE DON'T ACTUALLY KNOW WHAT THAT HIGHER RATE IS. SO SOME STUDIES HAVE SHOWN THAT THAT HIGHER RATE IS IN THE 70 PERCENTAGE POINTS. NOW, WE HAVE NEVER SEEN A CORPORATE TAX ANYWHERE NEAR THAT. AND WE DID HAVE A CORPORATE TAX CLOSER TO 50 percent, THAT WAS SORT OF THE HIGH END, AT A TIME WHEN WE SAW GREAT GLOBAL... WE SAW GREAT PROSPERITY IN SOME COUNTRIES. NOW, THE THING IS, IT'S NEVER IN AN ISOLATION CHAMBER. IT'S NOT LIKE, WELL, WE HAVE A 50 percent RATE AND LOOK AT HOW MUCH GROWTH WE HAD. YES, WE ALSO HAD DESTRUCTION IN EUROPE AND THE REBUILDING OF IT BY U.S. FIRMS AFTER WORLD WAR II AND OF COURSE THEY WERE ABLE TO BENEFIT FROM CIRCUMSTANCES AT THE TIME. SO WE'RE ALWAYS THINKING ABOUT THOSE RATES NOT IN ISOLATION BUT LIKE, WELL, WHAT ARE THE OPPORTUNITIES HERE AND WHERE IS THE COMPETITION? SO I THINK THAT QUESTION IS SO COMPLICATED, AND I APPRECIATE THAT, YOU KNOW, IT'S SORT OF ONLY A THING THAT TAX LAWYERS CAN LOVE, TO SIT AROUND AND THINK ABOUT, YOU KNOW, WELL, WHAT ARE ALL THE POSSIBLE VARIABLES THAT COULD GO INTO WHETHER A ONE PERCENTAGE POINT RATE IS GOING TO RAISE OR LOWER YOUR OVERALL REVENUE. IT'S A TOUGH DISCUSSION. YOU WILL SEE PEOPLE WHO WILL SAY, WELL, LOOK IT, THE RATES HAVE CHANGED OVER TIME, BUT THE PERCENTAGE OF THE TAX THAT WE COLLECT FROM THE CORPORATE INCOME TAX HASN'T ACTUALLY CHANGED THAT MUCH. AND THAT TELLS YOU SOMETHING ABOUT, WELL, YES, BUT... YES, BUT WE HAVE ALSO CHANGED THE BASE. WE'RE CONSTANTLY CHANGING THE BASE. NOT JUST, YOU KNOW, CHANGING WHAT KIND OF INCOME WE TAX BUT WITH EXEMPTIONS, WITH CREDITS, WITH DEDUCTIONS, INCENTIVES. YOU KNOW, THERE'S LOTS OF DIFFERENT WAYS TO DO THESE THINGS. SOME OF THEM ARE MORE SALIENT, MORE OBVIOUS TO THE PUBLIC, AND SOME ARE JUST NOT AT ALL OBVIOUS, UNLESS YOU KNOW AND YOU'RE AN INSIDER.

Steve says ALL RIGHT. BECAUSE, AS YOU'VE DESCRIBED IT, MANY CORPORATIONS AROUND THE WORLD ARE LOOKING FOR THE MOST FAVOURABLE PLACE TO, QUOTE, UNQUOTE, PARK THEIR MONEY, WHERE THE TAX SITUATION IS MOST FAVOURABLE. WE NOW HAVE AMERICA'S TREASURE SECRETARY JANET YELLEN PUTTING FORWARD AN IDEA FOR A MINIMUM CORPORATE TAX WHICH HAS OPENED THE DOOR TO A MINIMUM GLOBAL CORPORATE TAX. CAN YOU GIVE US SOME SENSE ABOUT HOW THAT MIGHT WORK, WHICH I PRESUME IS DESIGNED TO KIND OF REPATRIATE SOME OF THAT MONEY THAT THESE BIG CORPORATIONS ARE HIDING IN TAX-FAVOURABLE LOCATIONS; IS THAT RIGHT?

Allison says WELL, THEY'RE NOT HIDING. SO I JUST WANT TO BE REALLY CLEAR.

Steve says "HIDING" IS A PEJORATIVE WORD, RIGHT.

Allison says AND IT'S ALSO JUST... THEY DON'T NEED TO HIDE...

Steve says BECAUSE IT'S LEGAL.

Allison says SORRY?

Steve says IT'S LEGAL.

Allison says YEAH, EXACTLY. FOR THE MOST PART. I'M NOT SAYING ALL, OKAY? THERE'S DEFINITELY SOME FUNNY BUSINESS, AND I WOULD NEVER SAY THAT THERE'S PERFECT COMPLIANCE WITH ALL THE LAWS. BUT FOR THE MOST PART, MULTI-NATIONALS DON'T HAVE TO EVADE BECAUSE WE HAVE PAVED THE WAY FOR THEM TO REDUCE THEIR TAXES IN LEGAL WAYS. SO WHAT IS THIS GLOBAL MINIMUM TAX ABOUT? WELL, OKAY. TO CONCEPTUALIZE A LITTLE BIT, THE REST OF THE WORLD HAS BEEN TALKING ABOUT A GLOBAL MINIMUM TAX FOR A LONG TIME, AND THE U.S. HAS BEEN PART OF THOSE TALKS. BUT UNDER THE LAST ADMINISTRATION, THERE WAS SOME UNCERTAINTY CREATED AROUND WHETHER THEY ACTUALLY WANTED TO PARTICIPATE IN THAT. AND YOU HAVE TO THINK ABOUT THAT IN LOGICAL TERMS. LIKE, IF MOST OF THE MULTI-NATIONALS WE'RE TALKING ABOUT, LIKE THE FAANG, IF THEY'RE MOSTLY U.S. HEADQUARTERED, WHY WOULD THE U.S. WANT TO HAVE A GLOBAL REGIME WHERE OTHER COUNTRIES CAN TAX THOSE COMPANIES? WHAT IS IN IT FOR THE U.S. FOR OTHER COUNTRIES TO TAX THEM? AND I THINK THE LOGICAL ANSWER TO THAT IS: WELL, NOTHING. AND SO MOST... I THINK MOST PEOPLE ARE NOT SHOCKED AT ALL WHEN THE U.S. SAID, WELL, WE'RE NOT TOO INTERESTED IN ANY KIND OF PLAN AT THE GLOBAL LEVEL THAT SORT OF SHUFFLES AROUND THE INCOME TO MAKE IT POSSIBLE FOR OTHER COUNTRIES TO TAX. BUT THE GLOBAL MINIMUM TAX IS DIFFERENT. IT'S A LITTLE BIT COMPLICATED AND I'LL TRY NOT TO GET TOO IN THE WEEDS WITH THIS. BUT HERE'S THE BASIC IDEA: IF THE U.S. HAS A HIGH TAX RATE BUT OTHER COUNTRIES HAVE A LOW TAX RATE, THEN JUST IN THE SAME WAYS WE WERE TALKING ABOUT, CAPITAL IS GOING TO BE FEARED TO FLEE. WE'RE GOING TO WORRY THAT CAPITAL IS GOING TO GO TO THOSE PLACES WHERE THE TAX RATE IS LOWER. BUT IF THE U.S. HAS A HIGH RATE AND THEN SAYS, "OH, AND BY THE WAY, IF YOU GO ABROAD AND YOU GET A LOWER RATE SOMEWHERE ELSE, WE'RE JUST GOING TO TREAT YOU AS HAVING RECEIVED THAT INCOME HERE AND WE'RE GOING TO TOP YOU UP TO OUR HIGHER RATE. SO WHETHER YOU STAY IN THE U.S. OR YOU GO ABROAD, YOU'RE GOING TO FACE OUR HIGHER RATE." AND THE THING IS, THAT'S A REALLY HARD THING TO DO UNLESS YOU GET OTHER COUNTRIES TO HELP YOU DO THAT, RIGHT? YOU HAVE TO BE ABLE TO FIGURE OUT, WELL, WHAT INCOME DID THEY GET OVERSEAS AND HOW MUCH TAX DID THEY ACTUALLY PAY AND WHAT IS THE BASE? SO WHEN THE U.S. TALKS ABOUT A GLOBAL MINIMUM TAX, IT'S NOT OBVIOUS TO ME THAT WHAT THEY MEAN IS, A GLOBAL MINIMUM TAX THAT WILL MAKE IT POSSIBLE FOR OTHER COUNTRIES TO TAX U.S.-BASED MULTI-NATIONALS. I DON'T THINK THAT WE SHOULD BE ASSUMING THAT. I THINK WHAT WE SHOULD BE ASSUMING IS, THE U.S. UNDERSTANDS THAT IF THEY ARE TRYING TO RAISE REVENUE FROM THE CORPORATE TAX, THEN BEING UNDERMINED BY A RACE TO THE BOTTOM, IN WHICH THEY HAVE PARTICIPATED FOR DECADES, IF THAT CONTINUES AND THEY'RE UNDERMINED BY IT, THEN RAISING THEIR CORPORATE TAX RATE ISN'T GOING TO GET THEM THE REVENUES THEY WANT. SO GETTING COOPERATION FROM OTHERS MIGHT HELP MAKE THAT HAPPEN, BUT IT DOESN'T MEAN THAT THE REST OF THE WORLD IS GOING TO TAX THAT INCOME.

Steve says I CAN SEE WHY THE UNITED STATES WOULD WANT THE COOPERATION OF OTHERS TO MAKE THIS HAPPEN. I CAN ALSO, GIVEN YOUR DESCRIPTION OF THE WAY THINGS WORK, UNDERSTAND WHY OTHER COUNTRIES, IT WOULD NOT BE IN THEIR INTERESTS AT ALL TO HELP THE UNITED STATES TO MAKE THIS HAPPEN. SO IS THIS THING KIND OF DEAD ON ARRIVAL?

Allison says I DON'T THINK IT'S DEAD ON ARRIVAL. SO I'LL TELL YOU HOW WE USUALLY DO THINGS IN INTERNATIONAL TAX. THIS IS HOW WE DO THINGS. WE GENERATE SOME ENERGY AROUND SOME PROBLEM. CURRENTLY IT'S THAT THE FAANGs AND SO ON ARE NOT BEING TAXED ENOUGH. THAT IS A REAL PROBLEM. I'M NOT MINIMIZING THAT AT ALL. THAT'S ACTUALLY A BIG PROBLEM FOR US. SO WE GENERATE SOME ENERGY AROUND THAT. AND THEN WE GO TO THE INTERNATIONAL ARENA, AND USUALLY IT'S THE ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT, THE OECD, THAT COORDINATES A COOPERATIVE CONSENSUS-BUILDING EFFORT. WE GO TO THEM AND THEY START MAKING SUGGESTIONS. THEY START TALKING ABOUT, WELL, HERE'S THE SOLUTION AND HERE'S THAT SOLUTION. AND IMMEDIATELY EVERYONE IN THE TAX COMMUNITY POUNCES ON THAT, SAYS, WELL, (a) IT'S TOO COMPLEX, IT'S NOT WORKABLE, (b) IT'S NOT FAIR (c) IT'S NOT GOING TO WORK UNLESS THE U.S. IS ON BOARD (D) IF THE U.S. IS ON BOARD IT PROBABLY DOESN'T WORK FOR EVERYONE ELSE. EVERYONE STARTS ARGUING. AND THEN BECAUSE THEY'VE ANNOUNCED THEY'RE BUILDING A CONSENSUS, THEY WILL IN FACT DELIVER A CONSENSUS. THE QUESTION IS: WHAT WILL BE THE CONTENT OF THE CONSENSUS? SO MY PREDICTION IS THAT THERE WILL BE SOME SORT OF THING THAT PEOPLE CALL A GLOBAL MINIMUM TAX. AND WHEN YOU PULL BACK THE TITLE OF THAT AND YOU LOOK AT WHAT'S IN THAT PACKAGE, YOU'RE GOING TO SEE ALL KINDS OF THINGS ABOUT WHAT THE INCOME BASE IS, CONSOLIDATION, FINANCIAL STATEMENTS AND, YOU KNOW, INCOME STATEMENTS AND ACCOUNTING STANDARDS AND YOU'RE GOING TO SEE ALL OF THIS STUFF, AND EVERY ONE OF THOSE THINGS THAT SORT OF MAKES YOU GO: WELL, WHAT'S IN THIS? I DON'T EVEN UNDERSTAND WHAT THEY'RE SAYING. EACH ONE OF THOSE THINGS IS A POINT OF CONTENTION, WHICH THEN WILL BE HAMMERED OUT OVER YEARS AND YEARS AND DECADES, UNTIL THE NEXT ROUND WHEN WE SAY, OH, WE HAVE THIS PROBLEM. WE NEED TO FIX THIS PROBLEM.

Steve says EVERYTHING OLD IS NEW AGAIN?

Allison says YEAH, EXACTLY. I THINK THAT'S WHY WE SEE CANADA AND A LOT OF OTHER COUNTRIES SAYING, WELL, OKAY, ALL OF THAT IS SO NICE. WE'RE GOING TO DO THAT. BUT IN THE MEANTIME WE'RE GOING TO TALK ABOUT DIGITAL SERVICES TAXES, WE'RE GOING TO THINK ABOUT DOMESTIC SOLUTIONS, WE'RE GOING TO BE SORT OF CRAFTING A PLAN B, IF YOU WILL, FOR WHAT HAPPENS IF THAT GLOBAL CONSENSUS DOESN'T FORM IN A WAY THAT WORKS FOR US.

Steve says IN WHICH CASE, ALLISON, LET'S FINISH UP ON THIS. IF IT HAPPENS AS YOU DESCRIBE IT, IF THE OECD COUNTRIES, ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT, IF THOSE WESTERN COUNTRIES COME TOGETHER AND THEY ARE ABLE TO STRIKE SOME KIND OF GRAND BARGAIN, THE LIKES OF WHICH YOU'VE JUST DESCRIBED, WHAT COULD THAT MEAN TO CANADA'S BOTTOM LINE?

Allison says WELL, I THINK AGAIN THIS DEPENDS ON WHETHER CANADA IS ABLE TO IDENTIFY SOME PORTION OF INCOME FLOATING AROUND IN THE WORLD THAT WE CAN TAX, ON THE ONE HAND; OR, ON THE OTHER HAND, IF CANADA IS PRODUCING THE KIND OF MULTI-NATIONALS THAT ARE BRANCHING OUT INTO THE WORLD AND THAT A GLOBAL MINIMUM TAX ENABLES US TO TAX THEM, OUR OWN CANADIAN HEADQUARTERED MULTI-NATIONALS, SO BOTH OF THOSE ARE JUST A QUESTION MARK. IT'S HARD TO KNOW. AND I THINK WE WON'T KNOW UNTIL WE SORT OF SEE HOW THINGS SHAKE OUT AND BY THEN IT'S TOO LATE, RIGHT? THEN WE ALREADY HAVE A POLICY AND WE'RE GOING TO BE RESPONDING TO THE POLICY IN THE CONTEXT THAT IT'S OPERATING. SO, YOU KNOW, I HATE TO TELL YOU THAT I DON'T KNOW, BUT THAT'S THE REALITY. I DON'T THINK ANYONE KNOWS. AND ACTUALLY THAT'S WHY IT MAKES PEOPLE NERVOUS, RIGHT? AGREEING TO A CONSENSUS THAT YOU'RE NOT SURE WHETHER YOU BENEFIT OR MIGHT BE HURT BY MAKES PEOPLE SORT OF NOT SURE THEY WANT TO ENTER INTO THAT.

The caption changes to "Producer: Meredith Martin, @MeredithMartin."

Steve says WELL, I THINK OUR VIEWERS AND LISTENERS, AFTER WATCHING AND LISTENING TO THIS INTERVIEW, ALL NEED ONE OF THOSE MUGS BECAUSE I THINK WE NOW ALL HEART TAX LAW. THAT WAS A GREAT PRESENTATION. ALLISON CHRISTIANS FROM McGILL UNIVERSITY. THANK YOU SO MUCH FOR SPENDING SO MUCH TIME WITH US ON TVO TONIGHT.

Allison says THANK YOU SO MUCH AND IT'S BEEN A GREAT PLEASURE.

Watch: Is Global Tax Reform Possible?