Globalization, Tax Competition and the Welfare State

Genschel, Philipp

doi:10.1177/0032329202030002003

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Globalization, Tax Competition and the Welfare State

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Genschel, Philipp
Problemlösungsfähigkeit der Mehrebenenpolitik in Europa, MPI for the Study of Societies, Max Planck Society;

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Citation

Genschel, P. (2002). Globalization, Tax Competition and the Welfare State. Politics and Society, 30(2), 245-275. doi:10.1177/0032329202030002003.

Cite as: https://hdl.handle.net/11858/00-001M-0000-0012-5240-E

Abstract

Does globalization undermine the fiscal basis of the welfare state? Some observers are not convinced. They claim that aggregate data on Organization for Economic Cooperation and Development countries show no drop in tax levels and conclude from this that tax competition is not a serious challenge for the welfare state. This conclusion is unwarranted. The article shows that tax competition systematically constrains national tax autonomy in a serious way. It prevents governments from raising taxes in response to rising spending requirements and from detaxing labor in response to growing unemployment.