Michael S. Knoll (Pennsylvania) & Ruth Mason (Connecticut) have posted What is Tax Discrimination? The European Interpretation on SSRN. Here is the abstract:

Prohibitions of tax discrimination have long appeared in constitutions, tax treaties, trade treaties and other sources, but despite their ubiquity, little agreement exists as to how such provisions should be enforced or defined. This has led prior commentators to conclude that the concept is incoherent. In this Article, we draw on both traditional and modern economic theory to propose coherent guidelines for interpreting tax discrimination to require, in the alternative, locational neutrality, savings/leisure neutrality, or competitive neutrality. Furthermore, we argue that in common market contexts, such as the European Union, nondiscrimination provisions should be interpreted to promote competitive neutrality by preventing states from putting residents at a tax-induced competitive advantage or disadvantage relative to nonresidents. We show that, contrary to the dominant view, since maintaining a level playing field between resident and nonresident taxpayers does not necessarily require equal taxation of residents and nonresidents, courts and tax authorities cannot simply compare effective tax rates to root out tax discrimination. Instead, more subtle analysis is required. That analysis, however, produces simple rules of thumb that provide states and courts with clear direction in writing tax laws and evaluating challenges to those laws.