From the Firm to Economic Integration
- New Thinking in Political Economy series
Chapter 7: International tax problems: between coordination and competition
As stressed in different chapters of the present book, the argument in favor of harmonization usually rests on a wrong definition of a common market and on confusion between competition – which allows market integration – and the harmonization of the conditions of production. A common market implies competition, it does not imply the harmonization of the conditions of production: When there is freedom of entry into a market, different producers can compete, although they are in different environments and produce under different conditions of production. In the present chapter, we apply these general ideas to the case of international tax problems. Why are there international tax problems? Simply because nations exist! A nation can be defined as a specific area in which a government benefits from a position of monopoly to use legal coercion, which allows it to raise taxes. Now, individuals want to move or to trade from one nation to the other. These individual wants may be impaired by the existence of national tax systems.
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