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Are tax havens good? Implications of the crackdown on secrecy

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  • Alfons J. Weichenrieder

    (Goethe University Frankfurt
    Vienna University of Business and Economics
    CESifo)

  • Fangying Xu

    (Goethe University Frankfurt)

Abstract

While parts of the economic literature emphasize possible positive effects of tax havens on high-tax countries, the present paper argues that proponents of positive effects may have started from questionable premises, in particular when it comes to the effects that tax havens have for emerging markets like China and India. We reconsider the effect of tax havens if countries can differentiate tax rates conditional on foreign ownership of firms, but tax-haven secrecy makes identification of ultimate ownership difficult. In this setting, we derive positive welfare effects of a crackdown on tax haven secrecy.

Suggested Citation

  • Alfons J. Weichenrieder & Fangying Xu, 2019. "Are tax havens good? Implications of the crackdown on secrecy," Journal of Economics, Springer, vol. 127(2), pages 147-160, July.
    • Handle: RePEc:kap:jeczfn:v:127:y:2019:i:2:d:10.1007_s00712-018-0636-y
    DOI: 10.1007/s00712-018-0636-y
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    Cited by:

    1. Mongrain, Steeve & Oh, David & van Ypersele, Tanguy, 2023. "Tax competition in the presence of profit shifting," Journal of Public Economics, Elsevier, vol. 224(C).
    2. Sharafutdinova,Gulnaz & Lokshin,Michael M., 2020. "Hide and Protect : A Role of Global Financial Secrecy in Shaping Domestic Institutions," Policy Research Working Paper Series 9348, The World Bank.
    3. Mongrain, Steeve & Wilson, John D., 2018. "Tax competition with heterogeneous capital mobility," Journal of Public Economics, Elsevier, vol. 167(C), pages 177-189.
    4. Weichenrieder, Alfons J., 2016. "Panama & Co: Implikationen für die Steuerpolitik," SAFE Policy Letters 52, Leibniz Institute for Financial Research SAFE.
    5. Zarko Y. Kalamov, 2023. "Internal debt and welfare," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(1), pages 196-224, February.
    6. Narciz Balasoiu, 2021. "Tax Havens - An Insidious Mechanism for Evading Tax Obligations," RAIS Conference Proceedings 2021 0049, Research Association for Interdisciplinary Studies.

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    More about this item

    Keywords

    Tax haven; Secrecy; Tax information exchange; China; India;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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