The chapter by Peter Sorensen provides an admirably clear synthesis of the research on the policy questions surrounding capital income taxation in the presence of international capital mobility, and of some of the problems facing European countries. Like the literature it surveys, the chapter does not take a stand on the welfare effects of alternative regimes of capital income taxation, and therefore it does not answer the biggest question currently facing European countries: what are the efficiency losses of the current regime, and can governments afford to leave it unchanged, despite substantial integration of goods and factor markets?

The purpose of my comments is to highlight the reasons why, in the current state of the art, a reliable answer to this question is not available. Yet I believe that an analysis of the current regime and of its problems does help to evaluate alternative reform proposals. Interest in the field of international taxation began when capital controls were liberalized by a number of industrial and developing countries during the 1980s. This interest is at an all-time high in Europe, as EC countries embark on economic and monetary union. International taxation, however, like other areas of public finance, does not always rest on firm analytical grounds: hence the proliferation of terms like ‘criteria’ and ‘views’.