Most students of taxation know the advice that Jean-Baptiste Colbert, treasurer to Louis XIV, offered the beleaguered taxman: pluck the goose so as to get the most feathers with the least hissing. But suppose the goose is housed on one farm, eats the birdseed scattered in a second, and lays its eggs in a third. Which farmer gets the plumage? The European Union has a single market, but 25 tax authorities, each with its own interpretation of Colbert's dictum. Multinational companies, which hop from one jurisdiction to another, expose this muddle in its worst light. The companies bemoan the burden of complying with 25 different tax codes, and argue that their profits and losses transcend national boundaries any way. Some governments complain that the taxes a corporation pays bear little relation to the publicly provided benefits (a sound legal system, an educated workforce, passable roads) it enjoys. And the European Commission worries that competing tax codes impede the single market, keeping Europe's companies penned in behind national boundaries, deprived of continental economies of scale.
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