Yossarian’s Treaty: A Proposal to Solve the Treaty Override v. Byrd Rule Catch-22 When Implementing Multilateral Treaties

Abstract

On December 20, 2021, the Organization for Economic Cooperation and Development (OECD) published the long-awaited Pillar II model rules, a framework for implementing a global minimum corporate tax of 15%. Together with Pillar I’s rules giving jurisdiction to tax income without a physical presence, these two multilateral tax treaties are aimed at addressing a problem which had previously only been addressed through a web of bilateral treaties: how to tax cross border income.

Increasingly in our globalized world, the nations of the world are finding it critical to create multilateral solutions to some of our greatest challenges. While the international community has created multilateral solutions to address everything from collective security, global warming, and now international tax evasion; in the United States, multilateral frameworks that are replacing bilateral patchworks face an uphill battle before becoming the law of the land.

The bilateral treaties being replaced are largely self-executing and thus their provisions have automatic domestic force. The new multilateral treaties, however, are not likely to be self-executing. Not only will they require implementation legislation to gain domestic force, but that implementation legislation will have to supersede the domestic effect of the self-executing treaties. The Supreme Court has long held that a domestic statute enacted later in time can supersede a self-executing treaty’s domestic effect under treaty override doctrine. However, before the Court finds a statute to abrogate the domestic effect of an international commitment, Treaty Override Doctrine requires Congress’s intent be made clear, preferably by an express statement of intent to override.

Because Congress is heavily gridlocked, implementation will likely be passed pursuant to budget reconciliation. However, a procedural rule known as the Byrd Rule prevents the Senate from including any provision considered to be “extraneous” to the budget in a budget reconciliation bill. This presents a true catch-22, an express statement of intent is required by Treaty Override Doctrine, but the only way to get that legislation passed forbids an express statement. This note proposes that the express statement of intent be viewed as a “key” unlocking the implementation legislation and argues that Senate precident allows such a statement to survive the Byrd rule.