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Tax competition in the European Union

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  • Dehejia, Vivek H.
  • Genschel, Philipp

Abstract

Tax competition poses two problems for international cooperation: defection and distributive conflict. Multilateral cooperation to stop tax competition may fail because states face incentives to renege on their promises or because they face adverse distributional consequences, either of which makes cooperation an unattractive option for them. Conventional wisdom in international relations concentrates on the first problem, highlighting that the problem of tax competition resembles a Prisoner's dilemma. We argue instead that it is the peculiar distributional consequences of tax competition which explain why all attempts to regulate it cooperatively have failed. Combining theoretical analysis with empirical research on the European Union's unsuccessful record of tax cooperation, we show how distributive, within-group conflict amongst potential cooperators interacts with the constraints imposed by a non-cooperating outside world to make multilateral tax cooperation an especially elusive goal for international collaboration. -- Der Steuerwettbewerb stellt die internationale Kooperation vor ein Defektionsund ein Verteilungsproblem. Die Kooperation kann scheitern, weil Kooperationszusagen opportunistisch ausgebeutet werden oder weil Verteilungskonflikte verhindern, daß es überhaupt zu solchen Zusagen kommt. Die bisherige Literatur hat sich fast ausschließlich auf das erste Problem konzentriert. Sie zeigt, daß der Steuerwettbewerb die Struktur eines Gefangenendilemmas hat und erklärt dadurch das regelmäßige Scheitern von Kooperationsversuchen. Wir argumentieren dagegen, daß dieses Scheitern in erster Linie auf Verteilungsprobleme zurückzuführen ist. Modelltheoretische Überlegungen und empirische Befunde aus dem europäischen Binnenmarkt zeigen, wie Verteilungskonflikte sowohl zwischen den potentiellen Kooperationspartnern als auch zwischen diesen und dritten Staaten den Steuerwettbewerb zu einem schwer lösbaren Kooperationsproblem werden lassen.

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Bibliographic Info

Paper provided by Max Planck Institute for the Study of Societies in its series MPIfG Discussion Paper with number 98/3.

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Date of creation: 1998
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Handle: RePEc:zbw:mpifgd:p0046

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Cited by:
  1. Rixen, Thomas & Rohlfing, Ingo, 2005. "The political economy of bilateralism and multilateralism: Institutional choice in international trade and taxation," TranState Working Papers 31, University of Bremen, Collaborative Research Center 597: Transformations of the State.
  2. Genschel, Philipp, 2001. "Globalization, tax competition, and the fiscal viability of the welfare state," MPIfG Working Paper 01/1, Max Planck Institute for the Study of Societies.
  3. Vega, Alberto, 2012. "International governance through soft law: The case of the OECD transfer pricing guidelines," TranState Working Papers 163, University of Bremen, Collaborative Research Center 597: Transformations of the State.
  4. Lukas Hakelberg, 2014. "The Power Politics of International Tax Cooperation. Why Luxembourg and Austria accepted automatic exchange of information on foreign account holders’ interest income," EUI-RSCAS Working Papers, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS) p0375, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
  5. Genschel, Philipp, 2004. "Globalisation and the welfare state: A retrospective," TranState Working Papers 3, University of Bremen, Collaborative Research Center 597: Transformations of the State.
  6. Katharina Holzinger, 2003. "Tax Competition and Tax Co-operation in the EU: The Case of Savings Taxation," EUI-RSCAS Working Papers, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS) 7, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
  7. Delsen, Lei, 2003. "Are European welfare states sustainable?," Research Report 03C28, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  8. Höpner, Martin & Schäfer, Armin, 2012. "Integration among unequals: How the heterogeneity of European varieties of capitalism shapes the social and democratic potential of the EU," MPIfG Discussion Paper 12/5, Max Planck Institute for the Study of Societies.
  9. Scharpf, Fritz W., 2000. "Notes toward a theory of multilevel governing in Europe," MPIfG Discussion Paper 00/5, Max Planck Institute for the Study of Societies.
  10. Scharpf, Fritz W., 2001. "What have we learned? Problem-solving capacity of the multilevel European polity," MPIfG Working Paper 01/4, Max Planck Institute for the Study of Societies.
  11. Genschel, Philipp, 2000. "Der Wohlfahrtsstaat im Steuerwettbewerb," MPIfG Working Paper 00/5, Max Planck Institute for the Study of Societies.
  12. Rixen, Thomas & Rohlfing, Ingo, 2005. "The Political Economy of Bilateralism and Multilateralism: Institutional Choice in Trade and Taxation," MPRA Paper 325, University Library of Munich, Germany, revised 2005.
  13. Rixen, Thomas, 2005. "Internationale Kooperation im asymmetrischen Gefangenendilemma: Das OECD Projekt gegen schädlichen Steuerwettbewerb," MPRA Paper 329, University Library of Munich, Germany, revised 2005.
  14. Philipp Genschel & Achim Kemmerling & Eric Seils, 2011. "Accelerating Downhill: How the EU Shapes Corporate Tax Competition in the Single Market," Journal of Common Market Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(3), pages 585-606, 05.
  15. Oeffner, Marc, 2005. "Die Duale Einkommensteuer des Sachverständigenrates in der Diskussion," W.E.P. - Würzburg Economic Papers 59, University of Würzburg, Chair for Monetary Policy and International Economics.
  16. Genschel, Philipp, 2005. "Globalisation and the transformation of the tax state," TranState Working Papers 10, University of Bremen, Collaborative Research Center 597: Transformations of the State.

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