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Single capital, investment choices and preferential tax regimes

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  • Kosuke Oshima

Abstract

The assumption of separate tax bases on which the literature of preferential tax regimes has been based is not necessarily the case. In this paper we assume a single type of capital, or money, invested in different industries as well as in different countries. Tax elasticities can differ across industries depending on production technologies and therefore governments have incentives to provide preferential tax treatment to certain industries. Then it is shown that preferential regimes may not be desirable in different senses from the literature. Resumen La suposición de bases fiscales separadas en las que se ha basado la literatura de regimenes fiscales preferenciales no es necesariamente así. En este artículo asumimos un único tipo de capital, o dinero, invertido en industrias diferentes así como en países diferentes. Las elasticidades fiscales pueden diferir entre industrias dependiendo de las tecnologías de la producción y por tanto los gobiernos tienen incentivos para proporcionar un trato fiscal preferencial a ciertas industrias. Se muestra entonces que los regímenes preferenciales podrían no ser deseables en sentidos diferentes de los de la literatura.

Suggested Citation

  • Kosuke Oshima, 2010. "Single capital, investment choices and preferential tax regimes," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 659-668, August.
    • Handle: RePEc:bla:presci:v:89:y:2010:i:3:p:659-668
    DOI: 10.1111/j.1435-5957.2010.00285.x
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    References listed on IDEAS

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    1. Bucovetsky, Sam & Haufler, Andreas, 2007. "Preferential Tax Regimes With Asymmetric Countries," National Tax Journal, National Tax Association;National Tax Journal, vol. 60(4), pages 789-795, December.
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    5. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(2), pages 269-304, June.
    6. Keen, Michael, 2001. "Preferential Regimes Can Make Tax Competition Less Harmful," National Tax Journal, National Tax Association, vol. 54(n. 4), pages 757-62, December.
    7. Haupt, Alexander & Peters, Wolfgang, 2005. "Restricting preferential tax regimes to avoid harmful tax competition," Regional Science and Urban Economics, Elsevier, vol. 35(5), pages 493-507, September.
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