Tax Barriers to Intra-Union Trade: American ‘Federalism’, European ‘Internationalism’?

The task of creating a ‘common’ market is one of the central tasks of many unions. When the Philadelphia Convention drafted the 1787 US Constitution, there was little argument that the new Union had to become an economic union.1 And the objective to create a common market lay equally at the heart of the original European Union. The 1957 Rome Treaty was to establish a European Economic Community, whose central aim was the creation of a European ‘common market’.2 This market was primarily a common market in goods, but the Rome Treaty was equally committed to ‘the abolition, as between Member States, of obstacles to freedom of movement for persons, services and capital’.3 In order to create a common market in goods, the European Treaties thereby made a fundamental distinction between regulatory barriers and fiscal barriers to intra-state trade. While the former were to be negatively removed by Article 34 of the Treaty on the Functioning of the European Union (TFEU),4 fiscal barriers were subject to a different constitutional regime. And a closer look back at the US constitutional order also reveals that the Supreme Court, too, has ‘long subjected taxation to other limits and has long treated taxation differently from other kinds of regulation’.5 This differential treatment here partly stemmed—as in the case of the European Union—from the text of the US Constitution itself; yet, even for provisions that equally captured regulatory as well as fiscal charges, a fiscal ‘exceptionalism’ soon developed.