Is partial tax harmonization desirable?
Conconi, Paola, Perroni, Carlo and Riezman, Raymond Glenn (2007) Is partial tax harmonization desirable? Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.795).
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We consider a setting in which capital taxation is characterized by two distortions working in opposite directions. On one hand, governments engage in tax competition and are tempted to lower capital tax rates. On the other hand, they are unable to commit to future policies and, once capital has been installed, have incentives to increase taxes. In this setting, there exists a tax that optimally trades off the two distortions. We compare three possible tax harmonization scenarios: no tax harmonization (all countries set taxes unilaterally), global tax harmonization (all countries coordinate their capital taxes), and partial tax harmonization (only a subset of all countries coordinate capital taxes). We show that, if capital is sufficiently mobile, partial tax harmonization benefits all countries compared to both global and no harmonization.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HJ Public Finance|
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||Taxation -- Econometric models, Investments, Foreign -- Taxation, Capital movements -- Taxation, Stochastic analysis, Evolutionary economics|
|Series Name:||Warwick economic research papers|
|Publisher:||University of Warwick, Department of Economics|
|Place of Publication:||Coventry|
|Official Date:||March 2007|
|Number of Pages:||18|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
|Version or Related Resource:||Conconi, P., Perroni, C. and Riezman, R. (2007). Is partial tax harmonization desirable?. Brussels: Universite Libre de Bruxelles. (ULB Institutional Repository 2013/98550). ; Conconi, P., Perroni, C. and Riezman, R. (2007). Is partial tax harmonization desirable?. [Coventry] : Centre for Economic Policy Research. (CEPR Discussion Papers no.5761). ; Conconi, P., Perroni, C. and Riezman, R. (2008). Is partial tax harmonization desirable? Journal of Public Economics, 92(1-2), pp. 254-267. http://wrap.warwick.ac.uk/id/eprint/30616|
Bacchetta, P. and M. P. Espinosa (1995). “Information Sharing and Tax Competition among Governments,” Journal of International Economics 39, 103-121.
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