Q&A: A Cartel of States for Tax Coordination
A Cartel of States for Tax Coordination
Question
A cartel of companies coordinating prices in order to avoid competition over customers that would lead to lower prices is generally illegal. Put simply, that law prioritizes the welfare of all citizens more than the welfare of the company owners—a kind of passive tax on the rich. In a current-affairs context, what about a cartel among states coordinating tax rates in order to avoid competition over companies and citizens that would lead to lower tax rates?
The question is only from the “moral” angle, without any economic considerations or all kinds of secondary and further-order side effects. Suppose that the entire effect of a cartel of companies coordinating prices is simply higher prices for the consumer, and the entire effect of a cartel among states coordinating taxes is simply higher taxes on the company, which in the end will translate into higher taxes on the company’s relatively wealthy owners. Is it really inappropriate for states to form a cartel?
On the one hand, there seems to be a problem of consistency here; on the other hand (and this is my first thought; Copenhagen, where are you, you champion of the categorical symmetry?), one could say that precisely the same considerations by virtue of which cartels among companies are prevented are the considerations by virtue of which it is appropriate to create a cartel among states.
Answer
You assume that beyond the legal problem there is also a moral problem with a cartel among companies. I do not think so.
Discussion on Answer
I meant to say that there is no moral problem with creating a cartel, neither among companies nor among states. As for whether inconsistency is problematic, I tend to think not. A legislative body is allowed to take such an action (it is not immoral), and it is also allowed not to take it. If there is a body (like a state) that decides to take such action, that does not obligate other bodies (the UN?) to do so, especially since there is no body responsible for all states.
And what if it is the very same state body itself—a state (the U.S., for example) declares that it will impose sanctions on any other state that lowers its tax below a certain minimum rate, even though within that state itself there is a prohibition on forming cartels.
I do not see a difference. There are considerations in favor of prohibiting cartels, and a state or any other body or person is permitted to apply them as the case may be. If it seems to them that it is proper to prohibit cartels among companies for the benefit of the state, then that is what they should decide. And if at the same time it seems to them that it is proper to create a cartel of states for the benefit of the state, then that is what they should do. Concern for the other states is not their role, but rather the role of a body that governs all states (and there is no such body).
Thanks
Copenhagen, if you see this—could you share your opinion on the matter?
So you mean there is no problem from the standpoint of inconsistency in that on the one hand they forbid companies from cartelizing, and on the other hand they try to create a cartel against them?