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Accelerating Downhill: How the EU Shapes Corporate Tax Competition in the Single Market
Author(s) -
GENSCHEL PHILIPP,
KEMMERLING ACHIM,
SEILS ERIC
Publication year - 2011
Publication title -
jcms: journal of common market studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.54
H-Index - 90
eISSN - 1468-5965
pISSN - 0021-9886
DOI - 10.1111/j.1468-5965.2010.02136.x
Subject(s) - tax competition , tax reform , direct tax , ad valorem tax , european union , value added tax , competition (biology) , jurisprudence , tax avoidance , international economics , economics , indirect tax , business , market economy , public economics , international trade , political science , law , ecology , biology
Tax competition in the European Union is shaped by four partly opposed institutional mechanisms. While market integration and enlargement increase competitive pressure, the tax co‐ordination of the Council of Ministers and the tax jurisprudence of the European Court of Justice could potentially reduce it. The net effect is to accelerate tax competition. This article presents quantitative evidence to suggest that tax competition is stronger in the EU than in the rest of the world, and explores qualitatively why tax co‐ordination and tax jurisprudence have failed to prevent a race to the bottom in tax rates.