Lockwood, Ben and Makris, Miltiadis (2003) Tax competition and politics: double-edged incentives revisited. Working Paper. University of Warwick. Centre for the Study of Globalisation and Regionalisation, Coventry.

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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
Date:	September 2003
Number:	No.125
Number of Pages:	24
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Description:	First version, June 2002; this version, September 2003
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URI:	http://wrap.warwick.ac.uk/id/eprint/1996

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