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Tax harmonisation and political competition

Author

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  • GRAZZINI, Lisa

    (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium)

  • van YPERSELE, Tanguy

    (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium)

Abstract

In this paper, we analyse tax harmonisation in the framework of two countries asymmetric in their capital-labour endowment. In the first part, countries play a non-cooperative game and we examine how na- tional fiscal policies are decided according to majority voting. At the Nash equilibrium, inefficiency arises because of the corresponding mis- allocation of resources. In the second part, we analyse fiscal policy co- ordination within the institutional framework of the European Union, where policy reforms are decided by unanimity rule. In most cases, we show that the imposition of a minimum capital tax rate is refused.

Suggested Citation

  • GRAZZINI, Lisa & van YPERSELE, Tanguy, 1997. "Tax harmonisation and political competition," LIDAM Discussion Papers CORE 1997054, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1997054
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp1997.html
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    Citations

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    Cited by:

    1. Lisa Grazzini & Tanguy Van Ypersele, 2003. "Fiscal Coordination and Political Competition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(2), pages 305-325, April.
    2. Fuest, Clemens & Huber, Bernd, 2001. "Tax Competition and Tax Coordination in a Median Voter Model," Public Choice, Springer, vol. 107(1-2), pages 97-113, April.
    3. Peralta, Susana & van Ypersele, Tanguy, 2006. "Coordination of capital taxation among asymmetric countries," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 708-726, November.
    4. van Ypersele, T.P.M.C., 1998. "Coordination of Capital Taxation Among a Large Number of Asymmetric Countries," Discussion Paper 1998-137, Tilburg University, Center for Economic Research.

    More about this item

    Keywords

    Fiscal competition; Mobility of factors of production; In- ternational policy coordination; Political economy;
    All these keywords.

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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