Old institutions, new realities: The decline of Swedish social corporatism and tax competition in the European Union

This thesis is ultimately concerned with the future of the social democracy and, more broadly, welfare states in Europe. While European economic and monetary integration is proceeding apace, it seems that little attention has been given to the consequences of this integration for the ability of the state to sustain social policy. The question that this thesis attempts to address is the welfare state can survive under conditions of freely flowing factors of production within the European Union. The specific problem that is looked at is tax competition. Tax competition is defined in this paper as a situation in which states engage in a vicious cycle of lowering their tax rates in order to attract scarce capital and skilled labour from other countries. If tax competition occurs within the EU, then revenues will fall in a fashion such that all states lose out, and the ability of the state to provide the services of the welfare state will diminish. With it will diminish the chances for realizing social democracy.;Sweden is taken as a case study because it the most obvious example of a state whose tax system is under immense strain from tax competition. (Abstract shortened by UMI.).