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Preferential tax regimes with asymmetric countries

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  • Bucovetsky, Sam
  • Haufler, Andreas

Abstract

Current policy initiatives taken by the EU and the OECD aim at abolishing preferential corporate tax regimes. This note extends Keen's (2001) analysis of symmetric capital tax competition under preferential (or discriminatory) and non-discriminatory tax regimes to allow for countries of different size. Even though size asymmetries imply a redistribution of tax revenue from the larger to the smaller country, a non-discrimination policy is found to have similar effects as in the symmetric model: it lowers the average rate of capital taxation and thus makes tax competition more aggressive in both the large and the small country.

Suggested Citation

  • Bucovetsky, Sam & Haufler, Andreas, 2006. "Preferential tax regimes with asymmetric countries," Discussion Papers in Economics 1209, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenec:1209
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    References listed on IDEAS

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    1. Janeba, Eckhard & Smart, Michael, 2003. "Is Targeted Tax Competition Less Harmful Than Its Remedies?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(3), pages 259-280, May.
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    More about this item

    Keywords

    corporate taxation; preferential tax regimes;

    JEL classification:

    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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