Creeping Federalization

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dc.contributor.author	Sweeney, Richard J.	en_US
dc.date.accessioned	2009-02-04T10:24:53Z
dc.date.available	2009-02-04T10:24:53Z
dc.date.issued	2003-11-21T00:00:00Z	en_US
dc.identifier.uri	http://hdl.handle.net/10398/6806
dc.description.abstract	The U.S. Constitution importantly limits the degree to which the federal government can impose harmonization across member states. This paper reviews these limitations and how they have evolved substantially over time in the U.S. It also discusses some of the benefits and costs of such limitations, and argues that the EU may benefit from adopting similar limitations. Harmonization of EU tax codes is likely to be economically harmful. On theoretical grounds, tax rates are likely to be harmonized at a common rate that is higher than optimal for the EU. This suggests the benefits of constitutional provisions that make tax harmonization difficult to impose. Other types of harmonization have a less clear-cut costbenefit analysis. A federal commercial code that is uniform across member states reduces transaction and information costs, compared to leaving important code issues to member states; further, many states may keep codes for long periods that are sub-optimal compared to a given federal code. A federal code may, however, fit poorly with other institutions of member states, potentially causing large costs. Leaving codes to the states leads to competition across states, and may generate forces for change for the better. Competition also generates information about the effectiveness and costs of different commercial codes. Because any country’s initial code is likely to be sub-optimal, and is likely to become less optimal over time, information on how to improve codes is valuable. Likely it is easier to learn and adapt from member states than from other countries.	en_US
dc.format.extent	39 s.	en_US
dc.language	eng	en_US
dc.relation.ispartofseries	LEFIC working paper;2003-11	en_US
dc.subject.other	usa	en_US
dc.subject.other	føderalisme	en_US
dc.subject.other	skatteharmonisering-eu	en_US
dc.subject.other	eu	en_US
dc.title	Creeping Federalization	en_US
dc.type	wp	en_US
dc.accessionstatus	modt03nov21 inrumo	en_US
dc.contributor.corporation	Copenhagen Business School. CBS	en_US
dc.contributor.department	Institut for Finansiering	en_US
dc.contributor.departmentshort	LEFIC	en_US
dc.contributor.departmentuk	Department of Finance	en_US
dc.contributor.departmentukshort	DF	en_US
dc.idnumber	x656312687	en_US
dc.publisher.city	København	en_US
dc.publisher.year	2003	en_US
dc.title.subtitle	Limits on Economic Harmonization in The United States and The European Union	en_US