published in: Swedish Economic Policy Review, 2002 (9), 47-74
In Europe, the competence for social security and the right to levy income tax lie with the
country of employment in cross-border matters. This has two disadvantages. First, the
Employment Principle distorts active persons' choice of place of work. Second, the
employment-based regulation of state competencies cannot be applied to non-active
persons. The Treaty of Maastricht, however, confers the right of free movement to all citizens
of the Union. Against this background, this paper pleads for a reform in European policy coordination.
The Employment Principle should be replaced with the Principle of Delayed
Integration where cross-border matters are concerned.
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