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Demographics and Tax Competition in Political Economy

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  • Tadashi Morita

    (Faculty of Economics, Kindai University)

  • Yasuhiro Sato

    (Faculty of Economics, The University of Tokyo)

  • Kazuhiro Yamamoto

    (Graduate School of Economics, Osaka University)

Abstract

We examine possible impacts of demographics on outcomes of capital tax competition in political economy. For this purpose, we develop an overlapping generations model wherein public good provision financed by capital tax is determined by majority voting. When a population is growing, younger people represent the majority, whereas when a population is decreasing, older people represent the majority. We show that the race to the bottom is likely to emerge in the population growing economy whereas the race to the top might emerge in the population decreasing economy.

Suggested Citation

  • Tadashi Morita & Yasuhiro Sato & Kazuhiro Yamamoto, 2016. "Demographics and Tax Competition in Political Economy," CIRJE F-Series CIRJE-F-1012, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2016cf1012
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    References listed on IDEAS

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    1. Etsusaku Shimada, 2023. "Industry-specific analysis of the impact of changes in the macroeconomic environment on corporate profits and estimation of corporate tax revenue," International Journal of Economic Policy Studies, Springer, vol. 17(1), pages 1-61, February.

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    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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