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Is partial tax harmonization desirable?
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Conconi, Paola, Perroni, Carlo and Riezman, Raymond Glenn. (2008) Is partial tax harmonization desirable? Journal of Public Economics, Vol.92 (No.1-2). pp. 254-267. ISSN 0047-2727
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Official URL: http://dx.doi.org/10.1016/j.jpubeco.2007.03.010
Abstract
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. (C) 2007 Elsevier B.V. All rights reserved.
| Item Type: | Journal Article |
|---|---|
| Subjects: | H Social Sciences > HJ Public Finance |
| Divisions: | Faculty of Social Sciences > Centre for the Study of Globalisation and Regionalisation |
| Library of Congress Subject Headings (LCSH): | Taxation -- Econometric models, Investments, Foreign -- Taxation, Capital movements -- Taxation, Stochastic analysis, Evolutionary economics |
| Journal or Publication Title: | Journal of Public Economics |
| Publisher: | Elsevier |
| ISSN: | 0047-2727 |
| Date: | February 2008 |
| Volume: | Vol.92 |
| Number: | No.1-2 |
| Number of Pages: | 14 |
| Page Range: | pp. 254-267 |
| Identification Number: | 10.1016/j.jpubeco.2007.03.010 |
| Status: | Peer Reviewed |
| Publication Status: | Published |
| Access rights to Published version: | Restricted or Subscription Access |
| Version or Related Resource: | An earlier version of this paper was presented at the Conference on Global Economic Negotiations at Venice International University at the Free University of Brussels (ECARES) and at the Final Conference of Research and Training Network on “Trade, Industrialization and Development” at the Paris School of Economics. ; Conconi, P., Perroni, C. and Riezman, R. (2008). Is partial tax harmonization desirable? Brussels: Universite Libre de Bruxelles. (ULB Institutional Repository 2013/7010). ; Conconi, P., Perroni, C. and Riezman, R. (2007). Is partial tax harmonization desirable?. [Coventry] : University of Warwick, Economics Department. (Warwick economic research papers, no.795). http://wrap.warwick.ac.uk/id/eprint/1412 |
| Related URLs: | |
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| URI: | http://wrap.warwick.ac.uk/id/eprint/30616 |
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