Globalisation and the transformation of the tax state

How does globalisation affect taxation? The academic wisdom is split on this question. Some argue that globalisation spells the beginning of the end of the national tax state while others maintain that it hardly constrains tax policy choices at all. This paper comes down in the middle. It finds no indication that globalisation will fatally undermine the national tax state, but still maintains that national tax policy is affected in a major way. The effect is not so much to force change upon the tax state as to reduce its freedom for change. Comparing the first three decades of the twentieth century to the last three decades, it is remarkable how much change and innovation there was then and how much incrementalism and stasis there is today. -- Welchen Einfluss hat die Globalisierung auf die nationale Steuerpolitik? In der Politikwissenschaft gehen die Meinungen auseinander. Manche fürchten, die Globalisierung bedeute den Anfang vom Ende des Steuerstaates. Andere hingegen meinen, die nationale Steuerautonomie werde durch die Globalisierung kaum eingeschränkt. Die Wahrheit, so vermutet dieser Beitrag, liegt in der Mitte. Es gibt keinen empirischen Hinweis, dass die Lebensfähigkeit des Steuerstaates fundamental in Frage gestellt würde. Trotzdem bleibt er vom Globalisierungsprozess nicht unberührt. Der Effekt besteht nicht so sehr darin, den Steuerstaat zu Reformen zu zwingen, die dieser sonst nicht vorgenommen hätte. Der Effekt ist vielmehr, seine Reformspielräume generell zu verkleinern. Im historischen Rückblick fällt auf, wie viele heftige steuerpolitische Umbrüche es vor dem Einsetzen des verschärften Globalisierungsprozesses in den siebziger Jahren des 20. Jahrhunderts gab und wie wenige danach.

Globalisation and the welfare state: A retrospective

There are basically three stories about the globalisation-welfare state nexus. The first story argues that globalisation is the cause of the chronic crisis of the welfare state. As national economies open to the international market, governments are forced to adapt to the imperatives of global competition, and this means cutting cost-intensive welfare programs (globalisation theory). The second story argues that whatever the cause of the welfare state crisis, globalisation is not part of it. There is neither theoretical reason nor empirical evidence to believe that national policy autonomy has decreased due to increasing economic interdependencies (globalisation sceptics). The third story holds that globalisation, far from causing the welfare state´s troubles, is a consequence of these troubles, and part of their solution (revisionism). The paper reviews each of these stories, and counterposes them to simple descriptive statistics on OECD countries. -- Grundsätzlich gibt es drei Theorien über die Verbindung von Globalisierung und Wohlfahrtsstaat. Die erste Theorie argumentiert, dass die Globalisierung selbst die Ursache für die chronische Krise des Wohlfahrtsstaates darstellt. Da sich nationale Volkswirtschaften dem internationalen Markt öffnen müssen, sind Regierungen dazu gezwungen, sich den Vorgaben des globalen Wettbewerbs anzupassen, was bedeutet, kostenintensive Wohlfahrts-Programme zu senken (Globalisierungs-Theorie). Der zweite Ansatz geht davon aus, dass, was immer die Ursache für die Wohlfahrtsstaatskrise sei, Globalisierung kein Teil dieser Krise ist. Es gibt weder theoretische Argumente noch empirische Beweise um zu glauben, dass die Autonomie nationaler Politik infolge der steigenden wirtschaftlichen Interdependenzen abgenommen hat (Globalisierungsskeptiker). Die dritte Theorie unterstellt, dass die Globalisierung, weit davon entfernt, die Ursache für die Wohlfahrtsstaatskrise zu sein, eine Konsequenz und somit ein Teil der Lösung dieser Probleme darstellt (Revisionismus). Dieser Aufsatz prüft jeden dieser drei Ansätze und stellt ihnen einfache deskriptive Statistiken von OECD-Staaten gegenüber.

Which Way to Converge? The Europeanisation of National Tax Systems

In this article we investigate in how far European Integration stimulates policy convergence in various subfields of tax policy. We see that several causal mechanisms contribute to an EU-wide convergence of tax policies: imposition, competition, harmonization and learning/ communication. Whereas personal income taxation does not exhibit strong EU-specific reasons for policy convergence, corporate income taxation is spurred by deeper market integration and imposition through the ECJ. More importantly, EU harmonization and (strategic forms) of learning within EU member states have had a direct and noticeable impact on national systems of VAT and excise taxation

Transformations of the State

Since the second half of the twentieth century, the gradual nationalization of political authority that was typical for much of the State’s history since the seventeenth century has come to a standstill and given way to the denationalization of political authority. Non-state actors acquire political authority, thus giving rise to a complex network of political authorities, in which the State is only one authority among others. Yet, the denationalization of political authority remains fragmentary and incomplete. No non-state authority, be it an international institution, a private business or transnational organization, has the capacity to supplant the State. In fact, they all remain reliant on the State because only the State can provide the complementary resources that non-state actors lack to exercise political authority effectively and legitimately. For this reason, the State remains the key body of authority despite denationalization and the accretion of political authority by non-state entities. Its role has changed, however. The State no longer exercises authority always directly and exclusively through its own powers and resources, but more and more indirectly, by providing and complementing the powers and resources of non-state actors. The state remains the central authority but its role is transforming: once monopolist, the state is now becoming a manager of political authority

The fiscal anatomy of a regulatory polity: Tax policy and multilevel governance in the EU

The paper analyzes the common assumption that the EU has little power over taxation. We find that the EU's own taxing power is indeed narrowly circumscribed: its revenues have evolved from rather supranational beginnings in the 1950s towards an increasingly intergovernmental system. Based on a comprehensive analysis of EU tax legislation and ECJ tax jurisprudence from 1958 to 2007, we show that at the same time, the EU exerts considerable regulatory control over the member states' taxing power and imposes tighter constraints on member state taxes than the US federal government imposes on state taxation. These findings contradict the standard account of the EU as a regulatory polity which specializes in apolitical issues of market creation and leaves political issues to the member states: despite strong safeguards, the EU massively regulates the highly salient issue of member state taxation. --

Transformations of the state: from monopolist to manager of political authority

Since the second half of the twentieth century, the gradual nationalization of political authority that was typical for much of the State's history since the seventeenth century has come to a standstill and given way to the denationalization of political authority. Non-state actors acquire political authority, thus giving rise to a complex network of political authorities, in which the State is only one authority among others. Yet, the denationalization of political authority remains fragmentary and incomplete. No non-state authority, be it an international institution, a rivate business or transnational organization, has the capacity to supplant the State. In fact, they all remain reliant on the State because only the State can provide the complementary resources that non-state actors lack to exercise political authority effectively and legitimately. For this reason, the State remains the key body of authority despite denationalization and the accretion of political authority by non-state entities. Its role has hanged, however. The State no longer exercises authority always directly and exclusively through its own powers and resources, but more and more indirectly, by providing and complementing the powers and resources of non-state actors. The state remains the central authority but its role is transforming: once monopolist, the state is now becoming a manager of political authority -- Seit den 1970er Jahren kommt es zu einer Trendwende: weg von der Verstaatlichung von Herrschaft hin zu deren Entstaatlichung. Nicht-staatliche Akteure üben in wachsendem Maße politische Herrschaft aus. Dadurch entsteht ein komplexes Geflecht aus Herrschaftsstrukturen, in denen der Staat nur noch ein Herrschaftsträger unter anderen ist. Diese Entstaatlichung bleibt jedoch bruchstückhaft und unvollständig. Kein nicht-staatlicher Herrschaftsträger, weder internationale Institutionen, noch private Akteure oder transnationale Organisationen haben die Herrschaftsressourcen, um den Staat zu verdrängen und in seiner Rolle als Herrschaftsmonopolist zu beerben. Vielmehr bleiben sie auf den Staat angewiesen, weil nur er die komplementären Herrschaftsbeiträge leisten kann, die sie brauchen, um effektiv und legitim Herrschaft ausüben zu können. Der Staat bleibt deshalb auch unter den Bedingungen der Entstaatlichung die zentrale Herrschaftsinstanz, nur seine Rolle ändert sich: er mutiert vom Herrschaftsmonopolisten zum Herrschaftsmanager

Dictators Don’t Compete: Autocracy, Democracy, and Tax Competition. CES Open Forum Series #22 2018-2019

It pays to be a tax haven. Ireland has become rich that way. Why do not all countries follow the Irish example, cut their capital taxes and get wealthy? One reason is structural. As the economic standard model of tax competition explains, small countries gain from competitive tax cuts while large countries suffer. Yet not all small (large) countries have low (high) capital taxes. Why? The reason, we argue, is political. While the economic standard model implicitly assumes competing governments to be democratic, more than a third of countries world-wide are non-democratic. We explain theoretically why autocracies are less likely to adjust to competitive constraints and test our argument empirically against data on the corporate tax policy of 99 countries from 1999 to 2011. Our findings shed light on how domestic institutions and global markets interact in economic policy making

Speeding up, down the hill: how the EU shapes corporate tax competition in the single market

We show that tax competition in the EU is shaped by four interrelated institutional mechanisms: 1) Market integration, by reducing the transaction costs of cross-border tax arbitrage in the Single Market, 2) enlargement, by increasing the number and heterogeneity of states involved in intra-EU tax competition, 3) tax coordination, by restricting the range of competitive instruments at the disposal of governments, and 4) supranational judicial review by limiting the scope of unilateral defences against tax competition (judicialization). As a consequence, tax competition is significantly stronger in the EU, and the race to the bottom in corporate tax rates more pronounced than in the rest of the world. -- Wir zeigen, dass der Steuerwettbewerb in der EU durch vier miteinander zusammenhängende institutionelle Mechanismen gestaltet wird: 1) Die Marktintegration verringert die Kosten der Steuerarbitrage im Binnenmarkt. 2) Die Osterweiterung erhöht die Zahl und Heterogenität der Länder, welche am Wettbewerb in der EU beteiligt sind. 3) Steuerkoordination beschränkt die Auswahl der Mittel, auf welche die Regierungen im Wettbewerb zurückgreifen können. 4) Die Rechtsprechung des EUGH reduziert die Möglichkeiten der Nationalstaaten sich unilateral gegen den Steuerwettbewerb zu verteidigen. Deshalb ist der Steuerwettbewerb in der EU stärker als im Rest der Welt, und die Körperschaftssteuersätze fallen dementsprechend schneller als andernorts.

Globalization, tax competition, and the fiscal viability of the welfare state

"Does globalization undermine the fiscal basis of the welfare state? The conventional wisdom believes so: open borders cause tax competition, which in turn leads to a race to the bottom in capital taxation. However, the data show that revenues from capital taxation are fairly stable in OECD countries. Some observers conclude from this that globalization does not pose much of a challenge to the welfare state. This conclusion is unwarranted because it overlooks that tax competition was not the only challenge facing welfare states during the 1980s and 1990s. There was also slow growth, rampant unemployment, and high levels of precommitted spending. These problems exerted countervailing pressures that prevented a race to the bottom in taxation. Yet, this does not mean that national autonomy has not been diminished. The welfare state is trapped in between external pressures to reduce the tax burden on capital and internal pressures to maintain revenue levels and relieve the tax burden on labor." [author's abstract

Writing Sample

Excerpt. First published in Reference Surface 4 # (2014)