Volltext: Solving cooperation problems over international taxation: power, legitimacy and sovereignty

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. 
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. 
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


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