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power. Paper four continues this theme by looking at the EC’s use of legal action
to force member state Ireland into enacting change to its tax laws due to its role in
tax avoidance strate gies by Multinat ional Corporations (MNC) such as Apple.
Whilst paper two and three both illustrate that the US is the global trend-setter in
interna tional politic s via exercises of power that impinge on s overe ignty and are
of debatable legitimacy, paper four shows that other powerful actors such as the
EU may be copying the US’ assertive and controversia l approach.
1.4
Paper Four Synopsis
Paper #4: Eggenberger, Katrin.
The Political Economy of Tax Avoidance: Apple, Ireland and the EC’s
Puzz ling State Aid Case.
Submitted to Intern a tional Organization.
Paper
four looks at the puzzling case of the EC’s state aid ruling with regard to
Apple’s tax structures in Ireland. It explores a range of issues including the coop-
eration problems and distributional conflicts of tax competition, political discord
over sovereignty in the EU, the political, economic and soc ial im plicat ions of tax
avoidance, state capture and the rents earnt by MNCs, and optimal tax rate s. Paper
two argues that states are transformed from being na tion sta tes to competition
states through globalization, that resort to poaching each other’s tax base, with a
focus on personal taxes. Paper four focusses on how a competitive state facilitated
interna tional tax avoidance by MNCs and caused a major and ongoing dispute over
sovereignty in tax matters within the EU.
I p rovide an overvie w of the scope, scale and rationale of international corporate
tax avoidance by MNCs. Corporate tax is a key component of the tax systems of
developed countries because it is one of the primary ways of taxing capital. In the
US, about 10% of total tax revenues comes from the corporate incom e tax (US (US