Legislative, Judicial, Soft Law, and Cooperative Approaches to Harmonizing Corporate Income Taxes in the US and the EU
Charles E. McLure, Jr.
The Member States of the European Community have systems of taxing corporate income that are more appropriate for nations than for members of an economic union. This paper describes the problems of the present system, which is based on separate accounting and arm’s length pricing, the advantages of one based on consolidation and formula apportionment, such as those employed by the US states and Canadian provinces, and the desirable characteristics of such a system. The European Court of Justice outlaws practices inconsistent with a single market. But judicial harmonization cannot achieve a fully harmonized system. Since the required legislative harmonization is stymied by the requirement in the EC Treaty that tax provisions be adopted unanimously, the European Commission has proposed that “enhanced cooperation” between as few as eight Member States be employed to initiate harmonization. The paper examines judicial, legislative, and cooperative approaches to corporate tax harmonization in the EC and the US.
- Corporate tax harmonization; European Union
Available at: http://works.bepress.com/charles_mclure/1/