EXCLUSIVE/ In an interview with EURACTIV, “rock star economist” Thomas Piketty argued for a deep institutional reform of the European Union that would show citizens that Europe is working for social justice.
>> Read: Full interview with Thomas Piketty [in French]
Piketty welcomed the EU’s move to give citizens a greater say in the appointment of the next European Commission President by nominating lead candidates for the European Parliament elections, but said he does not expect much change without deeper institutional reform.
The author of the best-selling book Capital in the 21st Century and co-author of the Manifesto for Europe, lashed out at the centre-right European People’s Party candidate, Jean-Claude Juncker, the former Eurogroup chief and Prime Minister of Luxembourg.
Piketty finds it “surprising” that the EPP has chosen Juncker to lead its European campaign, saying Luxembourg “has obviously become a tax haven” and offers “a platform of tax exemptions for companies in other European countries.”
“It’s progress that people feel that their vote will affect the choice of the European Commission President, it’s obviously a huge step forward,” Piketty said. But he has “no illusions” with what the next Commission can achieve, even if it is “democratically elected”.
The economist is calling for a corporate income tax across eurozone countries to fight against tax optimisation.
“In the EU, we will soon have a much lower tax rate on corporate income than in the USA. It’s 35% at federal level, while in the EU we run around 25%, soon 15%,” he said, asking whether European citizens truly support taxing corporate profits less than the US authorities. This, he said, will result in an “overtaxation of labour, notably low and medium skilled labour”, which in the end leads to “a stagnation in employment and wages compared to the USA.”
“All this is symptomatic of a Union that is not effective enough on tax purposes, which also partly explains the low level of employment in Europe.”
Although an advocate of deeper EU cooperation on tax matters, Piketty does not want to “pool all taxes and public expenses” except for those which “public opinion has by now accepted that national sovereignty is an illusion”.
Parliamentary chamber for the eurozone
Piketty, and the other signatories of the Manifesto for Europe, have imagined setting up a “parliamentary chamber” of the eurozone made up of national MPs, which would make all the necessary budgetary and fiscal decisions in a more transparent and democratic way.
This, he said, will make national politicians take up their responsibilities on European issues, but will also bring back some legitimacy to the EU.
“If we really want to adopt common budgetary decisions that engage public finances (…) we need a parliamentary body in the eurozone that can discuss issues on a basis that is not only national,” he said. “The eurozone chamber would not have only one representative, but 20 or 30 MPs representing all political parties in proportion to the different national parliamentary representations. In this way, each of them would be facing their European obligations instead of constantly complaining.”
Asked what makes him think such a chamber would behave differently than heads of states and governments, Piketty said, “Yes, it’s possible that 30 MPs out of 30 vote always in the same way but that’s not the most plausible prognosis.
“There is a chance that once they’re with 15 German SPDs, 15 CDUs and the same diversity on the Italian and Belgian side, there will be different coalitions. So, sometimes the national logic will prevail, as the votes in the European Parliament show, but there will still be group votes.”
Making the institutional changes will most probably require a treaty change and probably referendums in some countries, the economist said. But he maintains that, unlike the 2005 failed attempt, such reforms would get citizens’ approval this time.
“The problem with the 2005 referendum in France is that it was about a treaty change that brought very little progress on the democratic aspect,” he said before pointing out it was unlike the Maastricht Treaty, which made a real step forward by introducing the common currency.
“So, if you show people that Europe introduces more fiscal justice in globalisation, to tax at a fair rate the multinationals which pay no taxes anywhere, I think that a majority in support of such a change could be found.”
Thomas Piketty is a Frrench economist who found fame in Europe and the United States after the publication of his book, "The Capital in the 21st century".
The book argues that when the rate of capital accumulation grows faster than the economy, then inequality increases.
Piketty is close the French Socialist Party and was an advisor to former presidential candidate Ségolène Royal.
He co-signed a "Manifesto for Europe", in which he and 14 other prominent French figures call for a deep reform of the current European institutional architecture.
- 22-25 May: European elections across 28 member states
- The Guardian: "Our manifesto for Europe"