Race to the bottom in tax policy

From Instapundit, Eastern Europe knows where it's at.

Why don't we see more of this?  Is this a trend or just a couple of data points?  What does the future hold?

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One problem is that the

One problem is that the European union is essentially a cartel of states, trying to prevent tax competition, and they might very well succeed. In France it is very common to hear about "fiscal dumping" or how retaliatory protectionist measures should be taken against those countries. The main campaign aid of the socialist runner for the last election, Montebourg went as far as claiming that France would not stand anymore the abuses of Switzerland...

Cartels

That's just it though: cartels generally don't work in markets. Why would a EU "cartel" work? Isn't there a lot of incentive for each state to cheat?

Sure cartel don't really

Sure cartel don't really work, that's why many politicians are pushing for a more stable form, monopoly through merging.

You also forget that unlike normal business cartel, the cheater can be punished with force (through embargo for example).

Sure cartel don't really

Sure cartel don't really work, that's why many politicians are pushing for a more stable form, monopoly through merging.

I'm not convinced. In the free market, merging is not the road to monopoly. 

You also forget that unlike normal business cartel, the cheater can be punished with force (through embargo for example).

Does the EU have an army?  If not, how does the word "embargo" apply?

By embargo I meant that the

By embargo I meant that the other nation might prevent the citizen of the other nation to trade with their citizens as retaliatory measures.

As for merger, Salin argues that cartels are not stable so that they either break up or merge in a single entity. I think it is a possible outcome for Europe.

Eastern Europe survived Socialism

One reason Eastern Europe is adopting modest tax policies is that these guys survived socialism. Anyone who realizes the devastating effects of a state controlled economy, mass redistribution and the end of private property can only adhere to such courageous measures. Let's give our EU leaders a free copy of Road to Serfdom by FA Hayek.

I'm skeptical of this explanation

Chileans went from Allende to Pinochet. Russia went from czars to communism to Putin. France has been "socialist" for over 200 years. As far as I can see, there's good evidence that big government begets big government.