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International repercussions of direct taxes

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  • Eggert, Wolfgang

Abstract

This peper anlyzes the impact of tax competition between two countries of un- equal per-capita capital endownments on tax rates and efficiency when distorting wage, residence-based and source-based capital taxes (or any combination of two instruments) are available for governments. The national welfare costs and benefits of tax rate varia- tions are shown to be ambiguous in the asymmetric Nash equilibrium due to the existence of tax base and terms of trade effects. Moreover, numerical simulation results indicate that non-cooperative equilibria in Nash strategies are inefficient from an international perspective, even if residence-based capital taxes are in the set of tax instruments available to fiscal authorities.

Suggested Citation

  • Eggert, Wolfgang, 1999. "International repercussions of direct taxes," CoFE Discussion Papers 99/02, University of Konstanz, Center of Finance and Econometrics (CoFE).
    • Handle: RePEc:zbw:cofedp:9902
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    References listed on IDEAS

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    1. Wilson, John Douglas, 1991. "Tax competition with interregional differences in factor endowments," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 423-451, November.
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    Cited by:

    1. Enrique G. Mendoza & Linda L. Tesar, 2003. "A Quantitative Analysis of Tax Competition v. Tax Coordination under Perfect Capital Mobility," Working Papers 507, Research Seminar in International Economics, University of Michigan.
    2. Dickescheid, Thomas, 2002. "Steuerwettbewerb und Direktinvestitionen," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 16, number urn:isbn:9783161477348, May.
    3. Enrique G. Mendoza & Linda L. Tesar, 2003. "Winners and Losers of Tax Competition in the European Union," NBER Working Papers 10051, National Bureau of Economic Research, Inc.
    4. Hikaru Ogawa & Taiki Susa, 2017. "Strategic delegation in asymmetric tax competition," Economics and Politics, Wiley Blackwell, vol. 29(3), pages 237-251, November.
    5. Mendoza, Enrique G. & Tesar, Linda L., 2005. "Why hasn't tax competition triggered a race to the bottom? Some quantitative lessons from the EU," Journal of Monetary Economics, Elsevier, vol. 52(1), pages 163-204, January.
    6. Till Gross, 2013. "Capital Tax Competition and Dynamic Optimal Taxation," Carleton Economic Papers 13-08, Carleton University, Department of Economics.
    7. Volker Arnold, 2002. "Asymmetric Competition and Co-ordination in International Capital Income Taxation," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 58(4), pages 430-448, November.

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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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