I got one am very pleased to see the EU doing good work against tax havens. It's no wonder the British press hate the EU so much... the proprietors, in general, have an interesting record when it comes to paying tax
It's certainly a competition. It's why Ireland (12.5%) and the UK (19%; 17% in 2020) have two of the lowest corporate income tax rates on the planet. It worked extremely well for Ireland, I've seen little evidence that it has worked for the UK so far. The UK's economy is net the same size it was in 2005, before adjusting for inflation, despite growing their population by about 10%. Ireland's economy by contrast is nearly 50% larger than it was in 2005.
They aren't actually quite so low, though, because unlike many countries there aren't nearly as many deductions and tax credits available.
Presently, the UK has an effective tax rate of 18.6%, compared with, e.g. France which has a statutory tax rate of 33.33% but an effective tax rate of 11.2%. I believe the UK has one of the highest effective tax rates in the EU.
But to be more accurate, we have to account for when the weaker eu countries were all hurting (pigs). I think Ireland's economy crashed in 2008 and so they have made a great recovery. I guess 2005 is adequately before that :-) I was thinking you were comparing nadir and peak or something.
To add context to the article: The EU "doing good work" as you say is not the news here. The real news here is that one of the EU's core but minor member states is attempting to refuse that "good work".
It shows how fragile the EU has become. Pushing the envelope for their own gains at the cost of delegitimizing EU institutions has become a sport among EU nations. But Luxemburg best exemplifies those countries that seemed immune to this, because Luxemburg best exemplifies a nation that would lose everything if the EU disintegrates. Even they are now doing it
"Pushing the envelope for their own gains at the cost of delegitimizing EU institutions"
Why does the EU exist, if not 'for the gain of the member states'?
Do you see the psychological paradox of Federalization?
A better argument is that if there is such contention, then maybe some of those EU level institutions should not exist.
And remember, the head of the commission is JC Junker, the very architect of Luxembourgs special tax schemes.
The job of the EU+Lux is to make the tax laws clear, not screw things up for business who by and large - just pay the taxes they are owed, but at the minimum possible rate.
"Do you see the psychological paradox of Federalization?"
No, it is exactly what I am talking about ;-)
I just wanted to point out, that for Luxemburg to join the rounds EU-de-legitimizers is a whole new ball game. Just an example: LUX politicians were pushing for the EU to make "Letzebuergisch" an official language of its own, while linguistically its just a variety of German (not even a dialect). Although that attempt failed (because science), the audacity gives a hint of how much Luxemburg gained from the EU so far.
It shows how much incompetence and disarray is present in the European political leadership at the moment, if even Luxemburg is starting to delegitimizing EU institutions.
It's perfectly reasonable for nation states to challenge the EU institutions, because the 'legitimacy' of EU institutions is not arbitrary - it depends on the support of member states!
If an EU institution is challenged by most members - it should absolutely be 'de-legitimized' and closed down!
This is the problem with the pro-Federalist psychology - added to the reality of 'bureaucracies that can only grow' - we 'assume' that a given EU entity should have supremacy, and not be 'undermined'? Why not? Who gave that EU organ power in the first place, and why does it have it?
I don't really support Lux's attempts to continue their low-tax status, but maybe they have a point.
As far as the Lux language - I think your argument is a stretch. Surely you know there are a zillion languages in the EU, each close to some other language. Having Luxembourgish 'recognized' doesn't necessarily carry them any favour or economic advantage, so I don't see how it's super relevant. I see what you are trying to get at - I just don't think that specific case is a good example.
But this race to the bottom for tax rates is clearly bad. Luxembourg could next make their rate 1%. Then Eire could come back with 0.5%. There's no good that comes of this - even the countries with the low rates are hurting their ability to raise enough money from tax. It only works in the short term when you have companies that cheat and book revenue from outside into that country. It's wrong and I would strongly support both (1) trying to stop the low rates, and (2) book money in other countries than you earn it. It's all just a bs tax dodge.
The EU governments could just stop taxing corporate income entirely, and only tax personal income, sales, and property. There's no reason in principle why corporations must be income taxed.
This is clearly a reductio ad absurdum, but mainline (indebted, null- or negative pro-capita economic growth) European countries will never slash the corporate tax rate down much further because they cannot afford it. Neoliberal rhetoric aside (keep in mind I'm a pretty orthodox and conservative macro-economist of the monetarist bent) trickle-down economics is clearly inaccurate and the fiscal multiplier is apparently greater than one. There's plenty of distortion in the tax systems of these states already (speaking of my native Italy, far too much bias on taxing income of firms and physical people as opposed to taxing consumption, because the latter is difficult to track because of the sizeable shadow economy, whereas the formers are supposedly easier to asses and monetise), the last thing they want is to suddenly end up relying on untested revenue streams. It's just too radical. Indeed there's a way of seeing this in terms of member states acting as a kind of fiscal cartel, and a couple of the states acting as the perennial defectors of Prisoner's Dilemma fame (cue Luxembourg and a couple others that shall go similarly unnamed). Really, the presence of these fiscal regimes within the EU community is a disgrace. On the other hand, keep in mind that Luxembourg is actually acting in an institutionally legitimate manner, presenting a case to the relevant EU authority instead of strutting its stuff unilaterally. They are going out there and testing the case, and there's a high probability that they will lose and set a strong precedent in their disfavour.
And then everyone stops being an employee to become a tax free one person contracting company, with car, home office, and anything else they can think of, considered business expenses.
Sure, but unless you have tax inspectors following the entire population around and security cameras in their home, you're never going to be able to enforce that, as demonstrated by people already doing this sort of scheme. It's easier to just disincentivize it in the first place.
"I got one am very pleased to see the EU doing good work against tax havens. It's no wonder the British press hate the EU so much."
Oh please!
Jean-Claude Junker - the #1 man in the EU - was the architect of Luxembourg's tax-avoidance schemes.
Your statement very difficult to comprehend.
The UK is a regular taxed entity. It is NOT a haven really in any way.
Meanwhile: Luxembourg, Monaco, Lichenstein, Isle of Man and a few others are broadly tax havens, and Ireland is a huge haven in specific corporate circumstances.
Not only is the EU rife with tax havens - but they are also duplicitous in their application of the law.
The EU's grab of billions from Amazon, Google and Apple is theft of private property.
The EU is acting like Venzuela or a banana republic.
Re-interpreting the law retrocatively 25 years???
These 'big corps' will do everything possible within the law to lower their taxes - but they obey the law and pay their taxes.
If the EU, in 1980 had said 'here are the rules' - then big corps would comply.
But the EU deciding one day that 'oh, this tax law, which we have actively accepted for 25 years as meaning 'this' - now means 'that'. Retroactively.
This is what tin-pot dictators like Putin do when they wish to nationalize specific industries - and it's scary to any business person and bad for business.
The EU's job should be to make sure there is relative tax harmony, that the rules are clear, and then that people follow those rules.
Not to change them willy nilly and grab billions because of socialist populist sentiment.
If they want to change how things are - change the tax laws. that's it.
Let's talk about Total (french oil company) which didn't pay ANY taxes in France until recently. BTW, it was the most prosperous company in France at that time.
Only when the media investigated did they start to pay some corporate taxes. There was way less hatred against Total than against any american companies as we see today.
Do you know that France distributes so many subsidies to french companies (110B€), that's way more than the total corporate taxes it collects (36B€).
And Total is still the clear winner in the tax cut race in France ;-)
Plus corporate taxes are already very low. The highest nominal tax rates in Europe are around 30%, but that is misleading. The actual real tax rates are somewhere from 5% to 10%, because every country has these "ifs and buts" clauses, that they use to lower corporate taxes, and effective act as a tax haven, while pretending they are not.
Coincidentally, I just checked this statistic on OECD: corporate tax revenue is just around 4% to 8% of total tax revenue. I wonder where these corporations would be if the normal people weren't contributing ~90% of tax revenue for upkeep of state infrastructure, that enables the existence of these businesses in the first place.
That's true, but it's worth mentioning that income tax also doesn't seem to be a large portion of most country's GDP. It seems to range between 1% to 14%, except Denmark (25%) which is an outlier. See: https://data.oecd.org/tax/tax-on-personal-income.htm#indicat.... The global average is only 8%!
Another interesting fact is that in the graph for corporate profit, Luxembourg actually has the highest rates, which must be because of its small size and huge number of companies that are registered there to benefit from the countries low tax rate.
Despite this I think corporate should be higher judging how much large multinationals earn. Otherwise the income inequality is only going to grow further.
Actually, I looked into it more, in my country, the Netherlands, and over all it is split: 55% individual contributions, 45% business contributions.
Income taxes are just plain income taxes. There are also social security contributions, part of which is paid by the employer. I know it is not necessarily appropriate to say that that is a tax the employer has to pay, but I counted it as such. Transaction taxes, I counted as a "business tax". VAT, I counted as individual taxation, mostly because it is regressive and hits the poor, i.e. non business owners disproportionately.
So my earlier claim was incorrect. It is more of a 50-50 split.
"social security contributions.... tax the employer has to pay": that's a great lie, that employers pay those, not employees.
For employers, it's one amount of money paid for hiring an employee: employers don't really care what's salary, and what's taxes. In France, employees don't even get 50% of their gross salary: there are more social security contributions than salary.
Employees should really want to reduce social security contributions, instead of thinking "my boss pays for it".
The highest nominal tax rates in Europe are around 30%, but that is misleading. The actual real tax rates are somewhere from 5% to 10%, because every country has these "ifs and buts" clauses, that they use to lower corporate taxes, and effective act as a tax haven, while pretending they are not.
Where do I sign up for those? Because my small businesses all pay the UK's published corporation tax rate of 19%, and the shareholders now get hit with a further dividend tax on the remainder.
Eliminate corporate income taxes, and make the change revenue neutral by raising taxes on individual corporate investors and high-income employees. The money eventually flows to them anyway. By eliminating corporate income tax we could cut out all the waste and non-productive tax avoidance financial engineering. We wouldn't need corporate tax accountants at all. This would boost growth rates and economic efficiency.
It doesn't matter where they live. Foreign investors can still be required to pay income and capital gains taxes on money earned in a particular country. The government can always block or seize international payments to tax evaders.
In theory the countries where Lewis Hamilton races and earns his income could tax him there. But generally they let him slip through loopholes to maintain good relations with F1.
To be fair: I'd expect Mr. Hamilton to be payed for his 40 races by exactly one company which is based in one location, rather than for each race by one of 40 companies.
That is unrelated, the things contested to Luxemburg is that there was a special agreement in place for Amazon, which is forbidden by EU regulations.
The thing contested from the Italian tax office is actual tax evasion.
Edit: to clarify, I mean that Luxemburg can have had illicit behaviour independently from Amazon acting legally in Italy (which in theory they did since 2015).
Definitely awful. The discovery led to a huge scandal, but of course it was discovered after Juncker became president of the EC. He shouldn't have the position he has, but I'm not sure what could be done about it at that point.
They could, if they cared. I don't think they do. EP election participation is very low, and I don't think it's widely publicized which parties back which candidates. De jure, it's the national governments that elect the commissioner. I doubt the commissioner plays much of a role in national elections. Finally, I don't think people know or care much who is the commissioner. I mean, this is HN, so probably a subset of top 5% intellectually curious people and people here still know nothing about how this stuff works.
The people care infinitely more about "informational" memes about curvy bananas and conspiracy theories about Muslims and cultural marxism than about who picks who in some EU structure.
At the same time even the slightest EU regulations are like communism and even the tiniest enforcement of EU law or solidarity is comparable to an armed invasion on the country's sovereignty.
Cases in point are how before downing of MH17 in Ukraine Western European attitudes about sanctioning Russia were "not our problem" and "we would lose money" and how Eastern Europe fought tooth and nail against refugees because "Merkel invited them" and "all Muslims are rapists and terrorists".
And to add insult to injury every time European Council or European Parliament does something dumb the EU is being called undemocratic.
The democratic care deficit in people is not even EU specific. Turnaround is low all around in various elections and some people don't even know the name of the ruling party, prime minister, president, etc. in their own country.
Maybe the EU should actually disband and let Germany steamroll us all yet again. Maybe then people would get it.
While I agree, we would all be better off if the populace was more intelligent, I can't deny that this is a very narcissistic attitude.
National elections carry vastly more importance for the people than EP elections, just look at the voter turnout statistics.
And rightfully so. Just look at the daily news of Denmark, Netherlands or Germany. Countries that are compared to other sets of nations remarkably similar. Yet, languages aside, have vastly different daily concerns and thus vastly different needs. A parliament where your nations needs are watered down is guaranteed to offend your nations voters over each iteration where such offending decision takes place.
The bigger the electorate, the lesser a vote counts, thus less participation and ultimately less democratic legitimacy.
Voting doesn't require extraordinary feats of intelligence or lots of time. Probably up to 99% of people in Europe are literate and not declared insane and thus able to vote. All it requires is an ounce of care and taking a slightly longer walk once every 5 years. Even if the chance of making a change is miniscule it should be a forgone conclusion.
Almost every major party that starts in national elections also starts in European ones so the lowest effort vote is to just vote along your party line for whoever (which many/most people do for all elections already anyway). I will not ever buy the excuse that 60% of Europeans have not enough time to vote or took the high road and decided to not vote to not skew the results by their uninformed choice.
It's a question of attitude towards EU and democracy itself more than it is a question of how much it truly matters.
Poland is a unitary republic with directly elected president with strong veto power (which means that mismatch between president and parliament in political direction causes parliament to be more tame in bills it drafts). There was no two consecutive presidents from same political affiliation so far and only once there were two consecutive parliaments under the same party's government (PO-PSL coalition). This means that there is high chance to affect the outcome and that this outcome determines both the direction the country goes in and how strongly it goes in it. Despite that the turnout for both presidential and parliamentary elections was only around 50% (55% for second round in presidential elections). Due to few quirks of the rules and how close it was even half a million extra voters in right places could have affected the outcome significantly.
Meanwhile in the federal German elections there was over 75% turnout this year despite the fact that German federal government is quite stable for the last 17 years (Merkel as chancellor) and being a federation every German has his Land government (that is infinitely more powerful and autonomous than a Województwo in Poland is) closer to him and his "daily concerns and needs".
It's also not a question of only the how much effect the vote has because Poland's turnout in European elections is worse than it is for many smaller (dare I say - more pro-EU..) countries like Belgium, Luxembourg, etc. despite that fact that we get more MEPs than they do. Even more ironically, each Polish vote was stronger in its effect on EP composition than theirs due to that higher MEP number we get and low turnout we provide, i.e. 7.5 million Poles elected 51 MEPs at 24% turnout while 4 million Belgians elected 21 at 90% turnout.
EU and its predecessors were also supposed to prevent wars (one of actually stated ECSC goals was to make a war between France and Germany literally impossible) and set long term strategic goals, not manage day-to-day lives of Europeans, that's what their municipalities should do for them.
You're wrong on many points, but let me just pick one random section:
"Poland's turnout in European elections is worse than it is for many smaller (dare I say - more pro-EU..) countries like Belgium, Luxembourg, etc. despite that fact that [Poland] get more MEPs than they do."
First of all: Bigger countries, like Poland, get more nominal MEPs but MEP per voter is just what it is: Larger countries get less MEP per vote.
Second of all: Voter turnout for EP is low in all of Eastern Europe. It's not a Polish thing.
Third: It is lower than it was decades ago in all of Europe.
Fourth: You're examples of Belgium and Luxemburg aren't exactly the best suited for your argument. Those countries have made EP election participation mandatory by law - thus higher turnout.
1. The fact Poland got more MEPs as a bigger country and that bigger countries get less MEPs per eligible voter to protect the smaller ones are absolutely obvious. I'm not sure what you are even "picking" here, the point is that with low Polish turnout and high number of MEPs Poland puts in a Pole makes more of a change towards the EP composition that a Belgian does so he should be more likely to vote. MEP per vote (per vote, not per eligible voter) is actually higher for Poland than it is for Germany and Belgium because of this low Polish turnout. This should incentivize Poles to go to vote at least as much as Germans do but it doesn't.
2. Nowhere did I say it's a Poland exclusive thing and it's irrelevant to the argument. You are the one that made a sweeping generalization about why people happen to vote in general so all I need to provide is singular examples to disprove it (which I did).
3. That's completely irrelevant to your claims about how people are more likely to vote when it matters to their daily life or makes a significant change about the end result.
4. That law is not enforced (according to Wikipedia), if it were there would be a 100% turnout, not "just" 90% and even then the laws are what the society wants (more or less) and the same society can get rid of such laws if it doesn't think them right or boycott the vote itself using invalid votes - the secret ballot protects them in that case. Instead they vote and invalid votes percentage is as low as it is in other countries and not extraordinarily high.
You are free to use Germany instead of Belgium if the dead law about mandatory voting is so important to you. Turnout for EP was 48% in Germany where there are no such laws and 30 million Germans picked 96 MEPs, giving 0.3 million of voters per MEP, while Poland had 0.14 per MEP with 7.5 millions of voters picking 51 MEPs. Germans who (individually) affect the outcome less and who are in a much stabler situation in general due to Germany's own strength and location went and voted more numerously than Poles.
You also absolutely ignored how Poles care less about out national "winner takes all" vote than Germans do about their (comparatively) less important Federal ones (that are also among a bigger group of eligible voters, thus making each single German vote count for less than a Polish vote does for how each country is ran, in addition to unitary vs. federal split and German stability and Polish volatility) or how Poles vote in their own important national elections only as often as Germans do in very much comparatively irrelevant to them EP ones (and they are twice remove from EU affecting them via their own Federal and Land governments while Poles are once remove via our parliament and much more vulnerable to any EU fluctuations because we are smaller and in worse location as a country on an EU border).
Poland and Poles are often at odds with EU, Poland in vulnerable EU border position, Polish national parliamentary and presidential elections always swing the result and the outcome is absolute because Poland is not a federation. Pole should vote like crazy in all these elections but they don't so clearly just the fact a vote affects the outcome stronger (which Polish vote does compared to a German one) and that the voted on topic affects the the potential voter more (which both EU and national elections do to a Pole more than they do to a German) are not as relevant as you made them out to be. There are clearly other factors at work here in more significant ways that cause these differences in participation between (i.e.) Germans and Poles (maybe attitudes from the communist past, short democratic history or being relatively fresh EU country, I don't know).
Your points about how people are more likely to vote if it affects their life or about how there is less participation when a vote counts less towards the result are still both completely invalid because there are clearly other factors (that happen to make Poles vote less than Germans do) and you are now nitpicking, arguing semantics, changing the topic and listing all of the irrelevant and wrong nitpicks you can find and saying it's "one random section" to make it seem like if my entire wall of text was all wrong, which it wasn't.
I am done wasting my time replying to someone who argues in a way as disingenuous and cherry picked as you and I will not read your next reply.
I think what these eastern European countries want is precisely for Germany to stay out of their business. Ex, on immigration policy is just one example.
What is the solution that has germany completely leaving these countries alone, whether it is directly, or indirectly via the EU?
To say it like that is absolutely disingenuous and misleading.
He was approved by the EPP, European Parliament (that is directly elected) and European Council (whose members are heads of states or government and they are directly or indirectly elected in their countries). If people wanted him out strongly enough he would be out. But most people don't care about elections to EP enough to even show up, turnaround in 2014 was 42%.
Ministers, heads of government, speakers of the house, military officers, police chiefs, other parts of the executive branch, presidents of national companies and the central bank, heads of intelligence agencies, military officers and other positions that are the actual decision makers are not directly elected but appointed by the winners of direct elections (often a single party that doesn't even hold the absolute majority of popular support, as is the case now in Poland, where PiS has 51.5% of MPs with 39% of votes due to few quirks of the rules) in many countries and that's apparently not an issue to anyone at all (i.e. not anyone attacks PiS on that fact, even though they deflect all criticism by saying they are "representing the will of Poles") but when the same process happens in the EU among a much larger group of country heads and MEPs and with an absolute majority in place then it's the end of the world and dictatorship.
He is elected by EP (which is directly elected) and the European Council (members of which are directly or indirectly elected in their countries) so he is only twice and thrice removed from the voters, which is the same or closer than most of the actual "bureaucracy" (and that's not a dirty word and voting process in itself is very bureaucratic too) that governs people lives in nations is (which is not a problem or sign of 'deficit of democracy' or whatever to anyone who uses these arguments against the EU).
Luxembourg also (article) continues/doubles down it's tax deal policy despite him not being their prime minister anymore so these deals are not bad enough to burn whoever defends them to the point of being unelectable, the commission is now on that case and he as the President of the Commissioner answers to EU structures so if he does prove inadequate in his role and other countries' representatives care enough then he is toast (and if they all don't then who/what is supposed to take care of him and on whose democratic mandate?) but if he doesn't then there is no reason for him to get removed even if Luxembourg hates him for it, support of home country is clearly not formally or practically required, i.e. Tusk stayed where he is (Council President) without Polish support because other country heads kept him there.
Guy Verhofstadt is an MEP so was directly elected by his home country. Mandelson and Junker were/are civil servants so wouldn't get elected directly, but appointed by elected politicians.
> nice place to retire
Or in Mandelson's case a nice place to negotiate a ground-breaking trade deal with India. I'm planning an easier retirement myself. Maybe the UK house of Lords. Unellected clapped out politicians...
Or they get sent there because they lost a fight in their party: "In Brussels, no one can hear you scream".
It's definitely a step down compared to national politics. I don't think there's anything wrong with that. Of course, if the EU was more powerful this might attract more up-and-coming politicians, but I don't think that's what people who make this complaint wants.
Guy Verhofstadt is a MEP, they are elected directly by the people.
Peter Mandelson was a commissioner, they are nominated by member countries.
Jean-Claude Juncker was the President of European Council, to become one he needed approval of most of its members which are heads of government or state of member countries.
The fuck is EU supposed to do with them then? Tell voters a MEP they directly picked in an election is thrown out, tell UK their chosen commissioner is thrown out and tell over 20 country heads in European Council the President they chosen is thrown out?
He was the President of the European Commission which requires approval of European Parliament (elected directly) and European Council (the heads of countries).
What the fuck is EU supposed to do with him? Throw him out and tell leaders and directly elected MEPs from 20+ countries to shove it? And who exactly is the EU in that case? Who and how could challenge these decisions while the majority of actual people in Europe don't give enough of a shit about Barroso and elect (if they even go to the elections..) these governments, heads of state and MEPs that put him where he was?
... because before the EU (i.e. all the treaties and "communities" that were set up piecemeal and then eventually coalesced into EU institutions), what was the premier instrument of dispute resolution in the European region?
Wouldn't it be much simpler to just require companies to pay taxes in the country their product or service is sold, as a percentage of said product or service? Basically a super sales tax.
Right now Italy feels like Luxembourg stole it taxes and meanwhile the US feels like those taxes are actually really theirs since its an US company.
For me at least, I feel like this: an iPhone, imported by an Italian company (or subsidiary), sold by an Italian dude working in an Italian mobile phone shop, to an Italian who pays with a €700 transfer from his Italian bank account to the shops' Italian bank account.. the taxes for that should fully go to Italy. Why shouldn't it, except for the fiscal advantages of global companies?
That's largely how VAT (value added tax) works in theory: A company collects VAT on what they sell, and counter that with VAT on what they buy, so that they effectively pay a tax on the "value added".
The problem with all of these things is that when you can pick and choose jurisdictions, then playing them up against each other becomes easy: Sell said phone for 690 from a low tax jurisdiction to the Italian company, and the "value added" on that 700 sale is 10.
This is one of the tricks they also use to avoid income taxes: Shift the revenue to a low tax country by applying trickery in terms of how subsidiaries shift products and revenue between themselves.
But this example also shows why you can't just tax people on the total value rather than the added value unless the tax is set very low:
For the majority of companies that don't control the whole value chain, the margin between the import price and the price the product is sold on to retailers at might very well genuinely be <10%. Any such tax on the total retail value that makes a dent in the Apple's of the world is likely to bankrupt large numbers of local companies.
If you were to apply such a tax at every step in the value chain, it'd very quickly become a big problem.
And while it might seem "easy" to instead e.g. put such a tax only on final products sold to end users in some product categories, it'd lead to a massive complexity in trying to create rules that are not trivially easy to evade with small changes to the way the products are sold.
In other words: The idea is good, but creating rules that are possible to enforce and not full of loopholes is where these thins tends to fall apart.
I really don’t know what is the problem that this example is supposed to illustrate. This is VAT working as expected, each participant in the chain pays for the difference between the revenue they get from their customers and the cost of goods they pay to their providers.
Ok. I was confused because the complete sentence read:
> The problem with all of these things is that when you can pick and choose jurisdictions, then playing them up against each other becomes easy: Sell said phone for 690 from a low tax jurisdiction to the Italian company, and the "value added" on that 700 sale is 10.
Honestly asking because US states fall all over themselves to give tax breaks to companies all the time. Hell, even individual cities compete with each other using tax breaks to attract employers.
I couldn't even imagine the federal government stepping in and forcing a state to collect more in taxes "to encourage competition".
VAT only applies to consumers, not businesses. To be fair, that seems to be where our corporate tax system is headed anyway: zero rating for the companies, and consumers pay all the taxes.
Corporations don't pay taxes in any meanings sense anyways.
Individuals always pay for taxes. Owners (lower profits), employees (lower wages and fewer jobs), and consumers (high prices and fewer products) all split the tax burden imposed on a firm.
Ah, ok, that explains all the squabbling -- the countries collect the taxes and then pay into the EU superstate.
One country doesn't want another to have a comparative advantage so they sue each other in the EU courts to force them to collect "their fair share" from the evil tax-dodging corporations. Theater of the absurd if you ask me but who am I to judge...
To get access to the huge US market a corporation must pay federal tax. A huge Chinese corporation is not able to to tell the states that if someone lets them avoid federal tax then the US headquarters will be built in their state. This is advantageous for all states.
The EU does not have something like that but they are able to say that while members can set their own tax code they cannot give preferential treatment to specific companies partly to avoid the scenario above. This forces them at least to pay the correct taxes in the little country they set up in in order to get access to the large countries.
