The first flaw in the usual rhetoric about taxation is that it neglects that some taxes are already Europeanised. The actual failure of the European political process is correctly circumscribed to personal taxes. The relevant thing is that the formal preservation of national sovereignty has come hand in hand with the progressive erosion of the de facto sovereignty of the nation-states. It does not take much ingenuity to see that, under such circumstances, all states have tended to reduce the tax burden over capital income and shift it to labour income. It is difficult not to see that this reflects a loss of factual sovereignty.
Nation states have an increasingly narrow margin for manoeuvre in the design of their tax systems.
Most of the discussions surrounding the major tax reforms that have taken place since the eighties have focused on the consequences that the reform would have on the international competitivity of the country in question. If one needs further evidence, one can consider the evolution of some technical aspects of corporate tax, which are directly related to cross-border activities. It is difficult to argue that there is much democratic support for the reforms of the tax treatment of capital gains or of the taxation of savings, which tend to go almost unnoticed by the public, despite their major distributive effects. It is paradoxical to see that the same nation-states have much more room for political decision concerning taxes which have been Europeanised. This is the case with the Value Added Tax, for example.