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Tax competition – areas of display and efects

Author

Listed:
  • Mitu Narcis Eduard

    (University of Craiova, Faculty of Economics and Business Administration, Romania)

Abstract

In the past, governments had more freedom in setting their taxes as the barriers to free movement of capital and people were high. The gradual process of globalization is lowering these barriers and results in rising capital flows and greater manpower mobility. Tax competition exists when governments are encouraged to lower fiscal burdens to either encourage the inflow of productive resources or discourage the exodus of those resources. With tax competition in the era of globalization politicians have to keep tax rates “reasonable” to dissuade workers and investors from moving to a lower tax environment. Most countries started to reform their tax policies to improve their competitiveness. However, the tax burden is just one part of a complex formula describing national competitiveness. The other criteria like total manpower cost, labor market flexibility, education levels, political stability, legal system stability and efficiency are also important.

Suggested Citation

  • Mitu Narcis Eduard, 2008. "Tax competition – areas of display and efects," Revista Tinerilor Economisti (The Young Economists Journal), University of Craiova, Faculty of Economics and Business Administration, vol. 1(11), pages 33-42, November.
  • Handle: RePEc:aio:rteyej:v:1:y:2008:i:11:p:33-42
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    tax competition; positive effects; negative effects; flat tax;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation

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