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Capital Taxation May Survive in Open Economies

Author

Listed:
  • Michael Braulke

    (University of Osnabruck)

  • Giacomo Corneo

    (Department of Economics, Free University of Berlin)

Abstract

Why do capital taxes still exist in an integrated world economy? When capital is perfectly mobile across countries and labour is fixed, a source-based tax on capital both reduces and redistributes world income. In a simple general equilibrium model we show that under plausible circumstances there always exists a country that bene¡¥ts from introducing such a tax. Countries that are richer in terms of human rather than ¡¥nancial capital tend to benefit from capital taxation.

Suggested Citation

  • Michael Braulke & Giacomo Corneo, 2004. "Capital Taxation May Survive in Open Economies," Annals of Economics and Finance, Society for AEF, vol. 5(2), pages 237-244, November.
    • Handle: RePEc:cuf:journl:y:2004:v:5:i:2:p:237-244
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    References listed on IDEAS

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    1. Bradford, David F., 1978. "Factor prices may be constant but factor returns are not," Economics Letters, Elsevier, vol. 1(3), pages 199-203.
    2. Gordon, Roger H. & Hines, James Jr, 2002. "International taxation," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 28, pages 1935-1995, Elsevier.
    3. Hines, James R. Jr., 1999. "Lessons From Behavioral Responses to International Taxation," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(2), pages 305-322, June.
    4. Slemrod, Joel, 2004. "Are corporate tax rates, or countries, converging?," Journal of Public Economics, Elsevier, vol. 88(6), pages 1169-1186, June.
    5. Hines, James R. Jr., 1999. "Lessons from Behavioral Responses to International Taxation," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 305-22, June.
    6. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    Cited by:

    1. Kangoh Lee, 2012. "Why is mobile capital taxed?," Journal of Economics, Springer, vol. 107(2), pages 157-181, October.
    2. Gebhard Kirchgässner, 2004. "Die Bedeutung der Körperschaftssteuer: Theoretische Überlegungen, die internationale Entwicklung und die Situation in der Schweiz," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 59(03), pages 239-272, September.
    3. Pierre Salmon, 2003. "The assignment of powers in an open-ended European Union," Post-Print hal-00445601, HAL.
    4. Barbara Annicchiarico & Valentina Antonaroli & Alessandra Pelloni, 2022. "Optimal factor taxation in a scale free model of vertical innovation," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 794-830, April.
    5. Riedl, Arno & van Winden, Frans, 2012. "Input versus output taxation in an experimental international economy," European Economic Review, Elsevier, vol. 56(2), pages 216-232.
    6. Kangoh Lee, 2021. "Labor market frictions, capital, taxes and employment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(6), pages 1329-1359, December.
    7. Corneo, Giacomo, 2005. "Steuern die Steuern Unternehmensentscheidungen?," Discussion Papers 2005/3, Free University Berlin, School of Business & Economics.

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    More about this item

    Keywords

    International capital taxation; Redistribution; Incidence;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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