Forced exit from the joint-decision trap: US power and the harmonisation of company taxation in the EU

Research output: Journal contributionsJournal articlesResearchpeer-review

Authors

EU member states have traditionally opposed the harmonisation of company taxation to preserve national sovereignty over a core state power. Accordingly, legislation and case law were marked by negative integration enforcing the free circulation of capital. Tax avoidance and competition intensified, entrenching interest heterogeneity among small low-tax and large normal-tax member states. In December 2022, however, the Council of the EU introduced an effective minimum tax and harmonised the calculation of taxable corporate profits. Why did member states exit the joint-decision trap in company taxation? I show that external pressure from the US government was decisive. Whereas previous proposals for harmonisation failed in the Council despite impeccable orchestration by the Commission and historically high levels of politicisation, the Directive on effective minimum taxation passed despite declining politicisation and little Commission involvement. Instead, the Biden administration clinched a deal on global minimum taxation with large member states and helped enforce it at EU level through bilateral pressure on opponents. By facilitating EU implementation of global minimum taxation, the Biden administration hoped to foster Congressional adoption of corresponding reforms. Hence, exits from the joint-decision trap can result from external pressure, whereas governments may enforce international agreements to exploit policy feedback.

Original languageEnglish
JournalJournal of European Public Policy
Volume32
Issue number6
Pages (from-to)1414-1438
Number of pages25
ISSN1350-1763
DOIs
Publication statusPublished - 2025

Bibliographical note

Publisher Copyright:
© 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.

    Research areas

  • European integration, commission entrepreneurship, corporate taxation, great powers, joint-decision trap, policy feedback, politicisation, tax avoidance
  • Politics

Recently viewed

Publications

  1. Tree cover mediates the effect on rapeseed leaf damage of excluding predatory arthropods, but in an unexpected way
  2. Does Allulose Appeal to Consumers? Results from a Discrete Choice Experiment in Germany
  3. If you call for frameworks in sustainability management... editorial to the special issue
  4. OPERATIONALIZING DIGITAL TRANSFORMATION FROM MULTIPLE PERSPECTIVES
  5. Reading instruction in 5th grade: teachers’ perspectives on promoting self-regulated reading in language and content area teaching
  6. Polarization of Time and Income
  7. Optimisation of root traits to provide enhanced ecosystem services in agricultural systems
  8. How digital reflection and feedback environments contribute to pre-service teachers’ beliefs during a teaching practicum
  9. Käsemann, Ernst
  10. Challenges in political interviews
  11. The theory of human development
  12. How cognitive issue bracketing affects interdependent decision-making in negotiations
  13. Time matters
  14. Integration of material flow management tools in workplace environments
  15. An Ecosystem Architecture Meta-Model for Supporting Ultra-Large Scale Digital Transformations
  16. Exports and productivity: A survey of the evidence from firm-level data
  17. Donor Upgrading Strategies
  18. Das Inverted Classroom Model (ICM) im Kontext kompetenzorientierter Hochschullehre
  19. Teaching Provenance to AI
  20. Effect of ambient conditions in friction surfacing
  21. Article 66 CISG
  22. Structuring and advancing solution-oriented research for sustainability
  23. Reading Marx
  24. Thermal disturbances attenuation using a Lyapunov controller for an ice-clamping device actuated by thermoelectric coolers