Taxing Europe: Two Cases for a European Power to Tax (With Some Comparative Observations)
45 Pages Posted: 9 May 2008
This paper considers the need for granting the European Union a genuine power to tax. The argument is developed in several steps. It is shown that the granting of such a power to tax is both legally mandated and legally framed. In stark contrast to classical international organizations, or for that matter, to the Articles of Confederation which predated the U.S. Constitution, the Communities were expected to acquire full taxing and spending powers. It is argued that the development of a genuine power to tax of the Communities is normatively desirable. The positive normative properties of a European power to tax are shown in two reform cases: the modest and the ambitious cases of reform. The principle of no public expenditure without taxation is shown to require financing of the present European budget through taxes. A proper determination of requirements of distributive justice in a complex political community is said to defend a larger European budget, aimed at the redistribution of economic resources among the citizens of the European Union. The two cases of reform are prudentially advisable. Redistributive taxation is the price of European civilization. It constitutes a basic precondition for the successful consolidation of the Union as a political community, and for the proper integration of new members once enlargement to the East is fully effective.
Keywords: European Union, Fiscal Federalism, Tax Law, non-discrimination
JEL Classification: E62, F36, H23, H24, K33, K34
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