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Journal Article

Taxation and Democracy in the EU


Ganghof,  Steffen
Politik und politische Ökonomie, MPI for the Study of Societies, Max Planck Society;


Genschel,  Philipp
Globale Strukturen und ihre Steuerung, MPI for the Study of Societies, Max Planck Society;

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Ganghof, S., & Genschel, P. (2008). Taxation and Democracy in the EU. Journal of European Public Policy, 15(1), 58-77. doi:10.1080/13501760701702199.

Cite as: https://hdl.handle.net/11858/00-001M-0000-0012-4702-2
Is corporate tax competition a threat to democracy in the European Union (EU)? The answer depends crucially on a positive analysis of the effects of tax competition on national policy autonomy. Most analyses focus on direct effects on corporate tax rates and revenues. We contend that this focus is too narrow. It overlooks the fact that corporate tax competition also has important indirect effects on the progressivity and revenue-raising potential of personal income taxation. We elaborate on these indirect effects theoretically and empirically, and explore the implications for the normative debate on the EU's democratic deficit. Our findings show that European integration can constrain national redistribution in a major way: the democratic deficit is real. Greater political contestation over the EU's policy agenda is desirable in order to mitigate this deficit.