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One of the political tides over here in the European Union is against the very idea of tax competition. That is, against the idea that different states, different nations, should have different tax rules and rates and that people can thus move around either themselves or their activities so as to pick and choose where and how much they pay in tax. This campaign against tax competition is a pernicious one but it looks like its going to be quite powerful. Its worth therefore laying out what is the point of having tax competition in the first place. We dont have to go all the way to the near paranoia of Mancur Olsen, who described government merely as being stationary bandits out to fleece the populace, either. We can be a lot more moderate than that and still justify tax competition.

Theres mainstream opposition to tax competition as this shows:

Our citizens and our companies expect us to cope with tax avoidance and aggressive tax planning. It is our common duty to meet their expectation by ensuring that everyone pays its fair share of tax to the state where profits are generated, Germanys Wolfgang Schuble, Frances Michel Sapin and Italys Pier Carlo Padoan wrote in a joint letter seen by The Wall Street Journal.

Since certain tax practices of countries and taxpayers have become public recently, the limits of permissible tax competition between member states have shifted. This development is irreversible.

And theres this new campaign from rather further over in left field, from the European Greens:

The aggressive tax competition between EU member states makes it possible for multinational corporations and wealthy individuals to avoid their tax responsibilities. The only winners of this are the wealthiest, whether individuals or corporations, and the losers are the vast majority of European citizens and smaller businesses. We want the EU and European governments to finally take action and we want your support to put pressure on them so they do.

Their declared end goal is that tax rates across the different nations of Europe must be harmonised: expressly with the aim of making tax competition impossible.

Now it is possible just to don our Mancur Olsen blinkers and view this as those bandits, predators upon the population, making sure that none of the sheep to be shorn manage to escape. But we dont have to go quite that far (despite my often agreeing with that view of government).

Think through what we like about competition in the first place. That Exxon, Total Total and Statoil Statoil all compete to provide us with oil is something we rather like. Not, of course, because it benefits Exxon, Statoil and Total. Rather, because it hampers them, hinders them, in their activities. If there was only one monopoly oil supplier in the world then we would be at their mercy. They could charge us as they wished for that gasoline to drive our cars, oil to heat homes and so on. Indeed, weve a large area of economics looking at what monopolies tend to do and we conclude that theyre destructive to the interests of us consumers. That competition between different suppliers acts as a brake on what they can do to us consumers. Thats exactly why we like competition. Because it protects us, the consumers, against them, the producers.

Government, governance, is no different. We here, as the citizenry, are the consumers of governance. And just like we pay for oil when we want it then we also pay for governance in the form of taxes (sadly, whether we want that governance or not). Government is the oil company, the provider of that governance funded by our taxes. And in exactly the same manner we think that competition here is a good thing. For competition limits what they may do to us.

Read more here:
The Terrible European Union Campaign Against Tax Competition