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Tax competition and politics: double-edged incentives revisited

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Lockwood, Ben and Makris, Miltiadis (2003) Tax competition and politics: double-edged incentives revisited. Working Paper. Coventry: University of Warwick. Centre for the Study of Globalisation and Regionalisation. Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation) (No.125).

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Official URL: http://www2.warwick.ac.uk/fac/soc/csgr/research/wo...

Abstract

We re-examine, from a political economy perspective, the standard view that higher capital mobility results in lower capital taxes - a view, in fact, that is not confirmed by the available empirical evidence. We show that when a small economy is opened to capital mobility, the change of incidence of a tax on capital - from capital owners to owners of the immobile factor - may interact in such a way with political decision-making so as to cause a rise in the equilibrium tax. This can happen whether or not the fixed factor (labour) can be taxed.

Item Type:

Working or Discussion Paper (Working Paper)

Subjects:

H Social Sciences > HG Finance

Divisions:

Faculty of Social Sciences > Economics
Faculty of Social Sciences > Centre for the Study of Globalisation and Regionalisation

Library of Congress Subject Headings (LCSH):

Taxation -- Econometric models, Capital movements -- Taxation, Fiscal policy, Economic development -- Mathematical models, Economics -- Political aspects

Series Name:

Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation)

Publisher:

University of Warwick. Centre for the Study of Globalisation and Regionalisation

Place of Publication:

Coventry

Official Date:

September 2003

Dates:

Date	Event
September 2003	Available

Number:

No.125

Number of Pages:

Status:

Not Peer Reviewed

Access rights to Published version:

Open Access

Description:

First version, June 2002; this version, September 2003

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