Eurostat reports that European governments cut the average rate of corporate taxation across the continent from its 2009 level of 23.5 percent to a new record low of 23.2 percent. The reduction continues a trend which spans many years and has resulted in a major shift in tax policy...
Since the middle of the 1990s, Europe’s biggest economy, Germany, has reduced its corporate tax rate by a staggering 27 percentage points, while its top rate for personal income tax has been cut by 9.5 points. During the same period, Spain and France slashed their highest income tax rates by approximately 13 percentage points. Italy reduced its corporate tax rate by 20.8 points and its top personal income tax rate by 6.1 points...
Thomas Piketty, professor at the Paris School of Economics, wrote: “We have tax competition in Europe, and the result is very simple: the mobile factor of production, i.e., capital, is taxed less and less; consequently, a less mobile factor like low-skilled labor is overtaxed...”
Camille Landais, a French economist working at the University of California, wrote of an “explosion of top income shares” in France beginning in the late 1990s, in which tax cuts for business played a major role. In summing up this process, Landais noted that Europe is still far less unequal than the United States. “But the trend is in line with the trends in the United States since the 1980s. If the tax systems—which are much flatter than most people think—continue to be as flat as they are, it’s clear that in twenty years there’s no reason France and Germany wouldn’t be as unequal as the United States.”
http://www.wsws.org/articles/2010/jul2010/pers-j08.shtml