<dd>++++++++++++++++ . . . Good point on tax competition, less so on bondholders. Surely the main thing we've learnt from the last few crises is that bondholders don't really exercise any control at all? . . . </dd>++++++++++++++++++++
mbs: "Lost control" is a bit of an overstatement. Tax revenues/GDP stopped growing in the 1980's but they have not declined. There was some shifting away from capital taxes, but this could have been due to politics rather than economic feasibility.
Taxing interest-bearing accounts and other financial assets is a big problem in Europe, not only because of integration/globalization, but also because of relatively weak enforcement devices (compared to the U.S.). Taxing corporations' operations is less of a problem, taxing individuals less still.
The ability of multinationls to avoid taxation by creative accounting is significant in terms of distribution of the tax burden at the tippy top, but much less so in terms of the volume of tax revenue as a whole. It's mostly a sideshow, albeit a lucrative one that, from the standpoint of a few individuals, means the difference between being rich and extremely rich.
mbs