Search

This paper investigates the relationship among tax competition, the equilibrium efficiency of providing public goods, and intergovernmental transfers, under labor market imperfections. Labor market imperfections cause unemployment-exporting externalities, in addition to fiscal externalities. One of the key points is the unemployment-exporting externality can be either a positive or negative externality. A transfer must internalize these two different externalities to provide public goods efficiently. We consider three specific transfers: tax base equalization, tax revenue equalization, and GDP-based equalization. This paper shows that tax base equalization is more effective than revenue equalization in improving the efficiency of public goods supply if two positive externalities are present. In contrast, tax revenue equalization may be better than tax base equalization if both positive and negative externalities are present. This implies that these two options fail to eliminate the overall external effect in some cases. We demonstrate that in a realistic situation, GDP-based equalization can internalize two different externalities perfectly. [ABSTRACT FROM AUTHOR]

Copyright of Journal of the Cukurova University Institute of Social Sciences is the property of Cukurova University Institute of Social Sciences and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper aims to empirically analyze the transnational double taxation issue, starting from the legal framework and showing through examples and situations, the manifestations of the double taxation phenomenon. The importance of the study is of extreme importance in the current economic context, since the main concern of E.U. is to mitigate the risks of Base erosion and profit shifting (BEPS). OECD defines BEPS strategies as "exploiting gaps and mismatches in tax rules", so concerns and studies in this field are of utmost importance. The integration of Romania into the European Union meant for the majority of taxpayers a means of perfecting their means of production as well as of their technologies, but also of increasing their economic and financial cooperation with different states. As a result, many natural and legal persons carry out activities from which they obtain income from two or more states. Therefore, they can be in economic connection with these states that put them in unfavourable situations, because, each state having its own tax system, the taxpayer can be subjected to a double taxation having the same tax base. [ABSTRACT FROM AUTHOR]

In this study, we extend the standard approach of horizontal tax competition by endogenizing the policy objectives that governments pursue. Following the literature on strategic delegation games, we consider a pre-play stage, where jurisdictions commit themselves to act as Leviathan or as benevolent agents. We show that the symmetric sub-game perfect equilibria correspond to three cases of tax competition among the Leviathan governments, moderate Leviathans, and benevolent governments, depending on the form of capital ownership. Further analysis reveals that asymmetric tax competition generates competition between the benevolent government and the (moderate) Leviathan government. The results provide grounds for benevolent or Leviathan objectives and explain why some governments act as one, while others aim toward a different objective. [ABSTRACT FROM AUTHOR]

We construct a tax competition model in which local governments finance business public services with either a source-based tax on mobile capital, such as a property tax, or a tax on production, such as an origin-based value-added tax, and then assess which of the two tax instruments is more efficient. Many taxes on business apply to mobile inputs or outputs, such as property taxes, retail sales taxes, and destination-based VATs, and their inefficiency has been examined in the literature; however, proposals from several prominent tax experts to utilize a local origin-based VAT have not been analyzed theoretically. Our primary finding is that the production tax is less inefficient than the capital tax under many—but not all—conditions. The intuition underlying this result is that the efficiency of a user fee on the public business input is roughly approximated by a production tax, which applies to both the public input and immobile labor (in addition to mobile capital). In marked contrast, the capital tax applies only to mobile capital and is thus likely to be relatively inefficient. [ABSTRACT FROM AUTHOR]

We find that corporate income tax (CIT) rates are significantly positively associated with corporate debt and negatively associated with household debt, using panel data of 28 OECD countries between 1995 and 2015. The found association between CIT and debt comes from small countries where CIT is more exogenous due to tax competition. The tax deductibility of interest payments encourages firms to use more debt when CIT is high. If the total supply of loanable funds is not affected by a lower CIT, a lower CIT leads to a larger fraction of the total private debt incurred by the household sector. The estimated association becomes stronger in regressions with difference-stationary variables. A decrease in the CIT rate can explain around one-fourth of the increase in the average household debt incurred during the last two decades. The paper is the first study to investigate and yield supportive, though weak, evidence of distortion in household indebtedness caused by a CIT cut. [ABSTRACT FROM AUTHOR]

As one of the strategies local governments adopt in response to fiscal stress, tax competition influences the social optimum level of public goods such as environment. This paper aims to investigate the mechanism of regional tax competitions from the perspective of financial stress. Recently, the effect of tax competition on environmental pollution rises gradually. Existing empirical researches mostly apply a fiscal decentralization-based perspective and ignore the spatial correlation between pollution and tax competition. Under the perspective of financial stress, this paper measures the impact of inter-regional enterprise income tax competition and value-added tax competition on environmental pollution of 30 provinces, using empirical analysis, and then estimates the direct effect, indirect effect and total effect based on it from year 2004–2014. It's been found that inter-regional tax competition not only brings negative influence to local environment, but also makes the environmental quality become worse in spatial correlation regions. These findings are of enlightening politic revelations to further standardize enterprise tax competition among local governments, and to promote the sustainable development both in economy and environment. [ABSTRACT FROM AUTHOR]

In this paper, we investigate whether partial tax coordination is beneficial to countries within and outside a tax union, in which countries are supposed to compete in taxes and infrastructure. Our results demonstrate that a subgroup of countries agreeing on a common tax rate can harm both member and nonmember states. This is in contrast to the classical findings that partial tax harmonisation is Pareto improving. When a minimum tax rate is imposed within a tax union, we demonstrate that it does not necessarily improve the welfare of the member countries. Moreover, both the high‐tax and low‐tax countries can be worse off. This conclusion is at odds with the classical result that a high‐tax country benefits from the imposition of a lower tax bound. [ABSTRACT FROM AUTHOR]

This paper investigates tax competitiveness among the EU member countries. The tax competition of countries causes both positive and negative effects on macroeconomic processes such as the effectiveness of government spending, the rationality of supply of externalities, and the length and amplitudes of business cycles. A considerable reduction of corporate tax in the EU is related to increased tax competition after new members entered the EU. Multiple criteria methods were chosen for the quantitative evaluation of EU countries from different regions of the EU. Criteria of evaluation were chosen and structured into a hierarchy. The convergence process of the new members of the EU is reinforced with the increasing tax competitiveness of such countries. Results of the multiple criteria evaluation revealed both the factors that increased the tax competitiveness of new members of the EU, and outlined the factors that hampered such competition. [ABSTRACT FROM AUTHOR]

This article considers the impact of preferential, base-specific taxation on equilibrium revenues. While policy makers have argued that it generates a prisoner's dilemma result, there is mixed support in the academic literature. Using a more plausible model with asymmetric base elasticities and heterogeneity of both firms and countries, I find that preferential taxation can generate greater revenues if countries exhibit sufficient productivity and/or population asymmetry. It is also less distortionary except in cases where moving costs are fully deductible. Allowing for noncorrelated, crosscountry profits is the key factor as it generates base expansion effects. [ABSTRACT FROM AUTHOR]

The paper examines fiscal competition towards fiscal harmonization in the EU, highlighting the legal framework outlined in this area by the provisions of the TFEU and arguing the need for an administrative monitoring and control authority. The research to identify the methods for strengthening the cooperation among member states of the EU has lead to arguments to monitor and to control tax competition. This is a controversy solution, which requires further investigation, as the competition is not to be control in order to produce the best results on the market. Tax competition is not a new concept, the first analyzes of the phenomenon dating back one century, but with important implication on the single European market. The effects of tax competition are analyzed, emphasizing the tendency of governments to engage in open strives to attract investments, maintain revenues and long deposit profits, at the level of the EU Member States, but also at a global level. This conduct is based on the regulatory policies and it has direct effects both on national economies and on the international business environment. Out of the various forms of competition, tax competition can be considered a way to achieve global competitiveness and, indirectly, a mean to block free movement in the EU. The research on the possibility to reinforce the EU integration using taxation mechanisms points out the use of directive as an integration method and proposes the uniform rule of law for this purpose, using the European regulation as a regulatory instrument. [ABSTRACT FROM AUTHOR]

This article deals with intellectual property (IP) boxes as an important factor in tax competition and tax planning. IP payments are used for profit shifting within a group of companies to lower their tax burden. One of the latest important developments in the use of IP boxes is the changing attitude of the OECD and its nexus approach, the application of which influences taxation within an IP box, especially the treatment of expenditures. This paper focuses on the situation regarding IP boxes after the implementation of the modified nexus approach, with an emphasis on changing the tax burden. These changes affect tax planning, thus managers need to know how they affect the overall tax burden of a company's investments. As a measure of these changes, the effective average tax rate (EATR) was selected. This study concentrates on three countries which have applied this approach: Hungary, the Netherlands and the United Kingdom. The results indicate that there is a new dependence after the application of the modified nexus approach: the structure of IP expenditures. The implementation of nexus approach makes the statutory income tax rate important also for IP income, and it causes a higher tax burden on IP income in the case of a small share of IP qualifying expenditures. A significant importance of the statutory corporate tax rate for the taxation of IP income is shown by changes in EATRs related to IP income after a reduction in corporate tax rates in Hungary and in the United Kingdom in 2017. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to identify the budget- and tax-related problems as may occasionally arise from the interaction of federal and sub-federal authorities hampering the growth of the investment attractiveness of regions, and to develop recommendations on their solution. To this end, a system of indicators and a typological scale have been developed to rank the Russian Federation subjects according to efforts of their regional authorities to build up local tax bases. To provide conditions for “holding” an investor in the territory of a federal subject for a long-term period, it is suggested that the existing subsidy rules be supplemented with tax characteristics. The taxing powers of regions in providing territory-oriented tax incentives are analyzed. The weak points of the powers division that lead to distortion of the local tax competition are identified along with the proposal of measures towards their elimination.

The concept of tax competition has been successfully applied in an analysis conducted in several European countries, but so far it has not been systematically tested either in Poland or in other countries of Central and Eastern Europe. There are two types of competition discussed in the article: classic competition for mobile tax base and ‘yardstick competition’, in which local politicians compete for political capital being related to the comparison of tax rates with neighbouring municipalities. It is expected that in Poland the ‘yardstick competition’ is more important from the classic competition for the mobile tax base.

1990’s world was quite different from the world of 1950’s. Especially in the last twenty years, the increasing involvement of Japan in the world economy since the 1990s, in addition to the dominance of globalization and market economy throughout the world, the rapid spread of information resulting from the developments in IT-technology and the international competition emerging in the field of technology have all led to some significant developments in the world economy. Reduction of high mobility income and corporate tax rates due to tax competition may cause an unjust distribution of the tax burden. The fact that indirect taxation constitutes about 70% of the tax revenues obtained in Turkey can be taken as an indication of the unfairness in the distribution of tax burden in Turkey. In this study, following a definition of globalization and tax competition, classification of tax competition, reasons for increasing tax competition, benefits and losses of tax competition are explained, and changes introduced by various countries in their tax systems due to tax competition, the distribution of tax burden resulting from tax competition in Turkey and the effectiveness of the new income tax law in Turkey in terms of tax competition are analyzed.

At the basis of conceiving the tax policy of an European Union member state, one must consider, on the one hand, fulfilling the government's own requirements, and on the other hand, achieving the objectives set by the EC Treaty. At present, the European Union has a quite harmonized and coordinated tax policy in the indirect taxes field, and partially in the direct taxes field, based on the free movement principle of goods, services, capital and labour; thus, although the member states have the freedom to set operation rules of their own national tax systems, this freedom is conditioned by the compliance with the priority objectives of the founding treaties of the European Union. The member states should avoid adopting discriminating tax measures (which could lead to a disadvantageous treatment for the persons, goods and services or capitals coming from other member states). Sometimes, the restrictions regarding free movement on the internal market are generated by the differences between the national tax systems, so that a certain degree of tax harmonization at the European Union level is necessary. The tax harmonization can be achieved either spontaneously (by means of the forces of the market), by means of active actions at the level of the European Union (the implementation of common policies, the coordination of the policies, the harmonization of the legislation, etc.) or by means of the passive actions of the European Court of Justice (the interdiction of certain types of conduct of the member states that do not comply with the norms of the European Union). In the absence of the tax harmonization, negative effects can occur, such as: the erosion of the national tax bases, provision of public services and goods at a sub-optimal level, unwanted changes in the structure of the taxes which are levied in the member states, and distortions in assigning resources at the level of the single market.

Tax competition is defined as the use of tax policy that will allow to maintain or increase the attractiveness of a particular territory for business location. Tax competition is used especially by the relatively under-developed countries, as foreign capital inflow gives them the possibility to implement modern technology, new management methods, or to increase exports. One of the effects of tax competition is the formation of tax havens, i.e. countries or territories offering preferential tax rates in order to gain capital from abroad. A comparative analysis of the income tax rates in the EU countries and certain tax havens shows that despite the progressive reduction of the rates of these taxes in the EU, the phenomenon of tax competition is still very strong, and the position of tax havens as countries with relatively low or very low taxes seems to be unthreatened. The question arises whether tax competition is a real problem for the EU Member States and if there exist arguments for tax harmonization, or at least tax coordination within the EU countries. The discussion in this paper suggests that the arguments for tax coordination in the EU are not yet strong enough. However, both tax competition and tax coordination have their supporters and opponents.

The main objective of this study is to quantify the impact caused by changes in federal tax on the tax policy of the Brazilian states, considering the presence of horizontal tax competition between states. Using panel data covering 26 Brazilian states plus the Federal District during the period 1995–2009, two models were estimated representing the average reaction of the states in response to changes in federal tax rates. In the first model, both levels of government act simultaneously, whereas in the second model, reaction is sequential, with the federal government acting as the leader in defining its effective tax rates. The results indicate a positive and significant response of states to increases in the federal tax rate, resulting in an over-taxation of the common tax base and higher tax rates. Additional tests show that the first model is the most suitable to represent the problem analysed.

The paper examines the long run changes in the tax revenue structure in developed countries. We are particularly focused on the testing of a potential shift from taxation on mobile tax bases to less mobile ones, which could be seen as one of the results of rising tax competition. We assume that a decrease in corporate tax revenues is compensated for by higher tax revenues from taxing work and property. Our dataset consists of panel date from 22 OECD countries within the period 1965 to 2012. We tested the potential causalities within the tax mix using Granger causality tests as well as the DOLS and FMOLS panel cointegration techniques in order to reveal possible long run causalities. As far as we know, these techniques have not before been used in this field. Long-run inverse causalities between corporate tax and personal tax revenue as well as corporate tax revenue and indirect taxes are found. Our results could have several important implications for the tax policies in developed countries.

In this article the author discusses the problem relating to the tax competition in the context of relocation as a process resulting from the ongoing globalization of economic activity. For this purpose the author discusses the essence and causes of tax competition and relocation. The conclusion is that relocation leads usually to an increase in the competitiveness of enterprises, their development, and thus to the development of the economies of individual countries. Healthy competition leads to streamlining the fiscal policies of competing countries and to the creation of a business-friendly atmosphere. Therefore, the role of governments, particularly in the developing countries, is such action, including the use of fiscal instruments, that would enable the achievement of competitive advantage in the international market and socio-economic development.

As the process of establishing international economic and financial relations between national economies is on the rise, many states encounter substantial difficulties in the process of collecting their tax claims. The most powerful countries in the world try to overcome this controversy by changing the international tax rules. The turning point was the financial-economic crisis of2008-2009, when the international community more vigorously embarked on resolving international tax issues. The OECD, the G20, the UN, the EU and a number of other powerful international organizations continued their activities on establishing a stronger framework of the international tax system. Global tax initiatives embodied in the soft law regulations have changed (to a varied extent) the structure of national tax systems as well as the direction of national policies, and ultimately undermined the financial foundations of the social welfare state. The world's 'taxation landscape' is indisputably dominated by two major processes embodied in the concepts of tax harmonization and tax competition. The global crisis in financing contemporary states has weakened their resistance towards more extensive international tax cooperation. As a result, they increasingly accept global tax standards and are more vigorously involved in the international exchange of tax information for the purpose of counteracting international tax fraud. Changes in national tax systems are necessarily accompanied by changing relations between tax administrations and multinational companies as large taxpayers. The traditional public law relations are gradually changed by introducing some elements of 'negotiations and mutual agreement', which are aimed at strengthening mutual trust and avoiding unnecessary disputes and costs. Although they are currently no more than theoretical assumptions and political considerations, there are proposals for introducing global taxes and establishing the world tax organization. Irrespective of the idealistic or utopian nature of these proposals, we simply cannot rule out the possibility that a future world disaster may serve as an valid excuse for accepting global taxes in order to remove the detrimental consequences of a force majeure. In that context, there is a growing number of countries that have been accepting the global tax standard on the automatic exchange of financial information, which has laid a solid legal and technical ground for introducing global taxation. The 'global taxation network' is gradually extending to all tax payers, featuring full fiscal transparency. Unless such global plans are undermined, all natural and legal persons will de lege ferenda become prisoners of the global fiscus. Unfortunately, such an apocalyptic future of taxation is quite probable considering the determination of the powerful international organizations and the world elite acting through these institutions to implement the global political agenda.

This article measures the effect of fiscal competition on obesity rates in the United States through education and health spending. We hypothesize that fiscal competition to attract firms results in lower business tax revenues and higher public infrastructure spending which crowds out education and health spending leading to an increase in obesity rates. We empirically test this hypothesis. We find that there is significant fiscal competition to attract firms. Next, we show that when business tax revenues are lowered and public infrastructure spending favouring businesses increased, public health and education spending declines and obesity rates significantly increase. Thus, fiscal competition significantly contributes to obesity rates through the education and health spending channel. [ABSTRACT FROM AUTHOR]

Abstract In a general equilibrium model with two periods and a finite fossil resource, I analyze the non-cooperative climate policies of symmetric countries that are in competition for mobile factors of production (capital and fossil energy). The paper shows that countries that want to slow down climate change but are also concerned about tax revenues from mobile tax bases have a rationale to supplement environmental taxes on fossil fuels with source-based capital taxes (or subsidies). More specifically, countries find it beneficial to subsidize capital in period one and tax it in period two. The first-period subsidy on capital facilitates a higher environmental tax by counteracting its adverse effects, and increases national and global welfare in equilibrium. By contrast, the capital tax in period two induces inter- and intratemporal distortions that lead to lower welfare. The rate of resource extraction is inefficiently high in equilibrium, no matter which tax portfolio is at the governments' disposal. Furthermore, unintended ('Green Paradox') effects of demand-side policies are shown to arise even in general equilibrium with factor mobility. Finally, factor mobility does not necessarily lead to a higher rate of extraction and lower welfare compared to autarky. [ABSTRACT FROM AUTHOR]

This paper examines efficiency in public input provision in two large regions with labor market imperfections. Because employment and pecuniary externalities are associated with public input provision, the provision level exceeds the optimal amount under the presence of wage rigidities in the capital‐exporting jurisdiction if only head taxes are used to finance government expenditures. Efficiency in public input provision will remain ambiguous in the capital‐importing jurisdiction unless a specific functional form is assumed for the production technology. The constrained efficient provision with public inputs can be restored with an additional tax (subsidy) on capital that is used to strategically influence the interest rate on the common capital market and to increase employment by attracting foreign capital. [ABSTRACT FROM AUTHOR]

This paper investigates the efficiency properties of tax competition between sub-metropolitan jurisdictions when capital, residents and workers are mobile, and both households and firms compete for local land markets. We analyze two decentralized equilibria: (1) With a local tax on residents and two separate local taxes on capital and land inputs, efficiency is achieved and the existence of a marginal fiscal cost due to residents’ mobility is revealed; (2) Combination of the taxes on capital and land inputs into a single business property tax leads local authorities to charge inefficiently high taxation on capital. We show that capital mobility induces a reduction in the business land taxation and local public inputs are used to offset the distorting effects of the property tax, accounting for the distorting impact of workers’ mobility. [ABSTRACT FROM AUTHOR]

The paper presents justification of the taxation optimization principles within the conditions of the tax competition. The concept of modelling the trajectory of implementing the offshore mechanism of business entities' taxation optimization is presented. The model of the trajectory of implementing the offshore mechanism of taxation optimization is developed. [ABSTRACT FROM AUTHOR]

This paper studies tax competition between two asymmetrical countries for an oligopolistic industry with many firms. Each government sets its tax rate strategically to maximize the weighted sum of residents’ welfare and political contributions by owners of firms. It is shown that if the governments care deeply about contributions and trade costs are low, the small country attracts a more than proportionate share of firms by setting a lower tax rate. The well-known home-market effect, which states that countries with a larger market attract a more-than-proportionate share of firms, may be reversed as a result of tax competition by politically interested governments. [ABSTRACT FROM AUTHOR]

This study examines redistribution policy through personal income taxes in Swiss cantons over the period 1995-2011. In a first step, redistribution measures are estimated with the help of exhaustive administrative data. Redistribution is decomposed into average tax rate and tax progression. In a second step, we investigate the impact of direct democratic institutions and their usage on tax policy and redistribution. The results suggest that the effect of direct democracy on income tax redistribution is a multilayered process. First, the theoretical availability of direct democracy tools does not seem to have the same impact as the effective use of them. Second, fiscal referendums may - in the short term -reduce redistribution through lower tax rates and lead to less tax progression. Third, an increasing number of ballots on initiatives leads to more tax progression and more redistribution in the long run. It seems that the short-term dampening effects of fiscal referendums on redistribution may be overridden in the long run by the expansive effect of popular initiatives. [ABSTRACT FROM AUTHOR]

The article deals with the analysis of relationships between tax competition and entrepreneurship development in Eastern European and Baltic countries during 2006-2017. Incomplete nature of tax systems reforming in these countries forms preconditions for their participation in cross-country tax competition in investment flows reallocation. The main instrument of the tax competition includes tax rates, which are defined by convergence tendencies in the studied countries. Other factors of the research are tax burden levels on the enterprise, tax administration indices and macroeconomic indicators. The entrepreneurship development at the country's level is characterized by a number of new businesses, the duration of their life cycle and their liquidation indices. The calculations results show that higher levels of absolute tax rates for enterprises lead to the reduction of their creation volumes in the country's economy. High level of the tax burden partially restrains entrepreneurial activity. Tax administration plays a significant role in the provision of the country's tax competition. Time to pay taxes and the number of tax payments have a great impact on entrepreneurship development at different stages. The hypothesis is proved that tax factors impact on the entrepreneurial activity is reasonable to be observed within the context of the country's macroeconomic conditions. [ABSTRACT FROM AUTHOR]

Capital tax competition is known to result in inefficiently low tax rates and an undersupply of public goods. The provision of public goods and with it the welfare of all countries can be enhanced via tax coordination. Based on the standard Zodrow-Mieszkowski-Wilson tax-competition model this paper analyzes the conditions under which tax coordination by a group of countries is self-enforcing. In our analytical framework, there always exists a rather small stable tax coalition. For some subset of the parameter space the grand coalition is stable, even if the total number of countries is large. If the stable coalition is small, it is not very effective in mitigating the inefficiency of the non-cooperative Nash equilibrium. The ineffectiveness is increasing in the total number of countries. [ABSTRACT FROM AUTHOR]

This research is motivated by the global trends that indicate many countries are competing to attract foreign direct investment flows through the adaptation of the tax policies that encourage harmful tax competition issues. The interests of addressing these issues are to minimize the distortion of single market as in EU (European Union) and to ensure efficient tax structure in ASEAN. Adopting quantitative approach, secondary data were obtained through literature review. It was found that the phenomenon of tax competition in ASEAN strengthened as indicated by the higher rate of tariff reduction of corporate income tax in ASEAN, fundamental differences system of taxation in ASEAN and various tax incentives offered. To overcome this problem, the author examines the urgency of the harmonization of income tax in the ASEAN with comparative study with CCCTB (Common Consolidated Corporate Tax Base) in EU. Looking ahead, ASEAN will need the political commitment to start corporate income tax harmonization in ASEAN with regard to neutrality and subsidiarity criteria that could be a solution to overcome the practice of harmful tax competition. [ABSTRACT FROM AUTHOR]

In this work, we simulate the effects of the tax autonomy of the Austrian states on the levels of public employment in each state. We show that depending on the strength of the public sector lobby, tax autonomy would require a reduction of employment in the public sector of between 25 and 35% of the current level. We also show that tax autonomy increases welfare levels by 1-1.5%; that is, the positive change in the disposable income of the workers more than offsets the welfare loss resulting from the lower provision of public goods. Finally, we show that the reduction of public employment is superior in terms of welfare to an alternative scenario in which employment levels are held constant but the wage levels in the public sector are adjusted. [ABSTRACT FROM AUTHOR]

This article explores the strategic interactions between overlapping counties and school districts within the context of property tax policy. Overlapping local governments share either part or all of their property tax bases and therefore may take into account each other's tax policies when deciding their annual property tax rate. A dynamic model is developed to analyze how property tax rate determination is influenced by the fiscal policies of both overlapping and neighboring local jurisdictions. The results suggest a short-term mimicking effect that is largely canceled out the following period. These findings help to develop a more complete understanding of how the broader set of environmental and institutional attributes of local governments influence their fiscal policies. [ABSTRACT FROM AUTHOR]

Copyright of Revue d'Economie Politique is the property of Editions Dalloz Sirrey and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We propose a timing game of asymmetric tax competition with fiscal equalization scheme. The study finds that governments tend to play a sequential-move game as the scale of equalization transfer increases, which explains the emergence of tax leaders in tax competition. The presence of a tax leader is likely to exacerbate capital misallocation among countries, suggesting that equalization transfers aimed at narrowing the interregional fiscal gap might cause an inefficient capital allocation. [ABSTRACT FROM AUTHOR]

Research background: Real estate and urban economics literature are abundant in studies discussing various types of property taxes and their characteristics. A growing area of research has been focused on tax equity, tax competition, and yardstick competition, where the latter two reflect the idea of tax mimicking. Recently, due to substantial developments in spatial and regional economics, more attention has been drawn to spatial effects. Empirical results are focused on spatial interaction and diffusion effects, hierarchies of place and spatial spillovers. Property tax system in Poland differs from those utilized in the majority of developed countries. As a consequence, property tax policy at the local government level (including tax competition and tax mimicking effects) in Poland can differ substantially from those found in previous research in the US and other European countries. There are few studies addressing the problem of tax competition and tax mimicking in Poland from an empirical perspective. Purpose of the article: In the article, we explore spatial interdependence in property taxation. We identify clustering or dispersion of high and low values of the tax rates within major metropolitan areas in Poland. The effects can indicate the presence of tax mimicking among municipalities in given metropolitan areas. Methods: We analyze the data from 304 municipalities in 10 metropolitan areas in Poland from the year 2007 to 2016. The data covers four property tax rates: (1) on residential buildings (2) on buildings used for business purpose (3) on land used for business purpose (4) on land for other uses. To explore the spatial distribution of rates, we used global and local spatial autocorrelation indicators (Moran's I statistic and LISA). Findings & Value added: The results suggest the presence of spatial correlation within metropolitan areas. We also found significant differences between metropolitan areas. The results of the study fill the gap in empirical research concerning property tax interdependencies and tax mimicking in Poland. [ABSTRACT FROM AUTHOR]

This paper examines the impact of Japan’s 2009 adoption of a territorial tax regime using event study methods which leverage individual firm characteristics to identify underlying drivers of market reactions. Differences in Japanese firms’ foreign and domestic effective tax rates yield an aggregate capitalization effect of ¥4.3 trillion, while firms with less prior foreign exposure and fewer opportunities for tax avoidance experienced relatively larger abnormal returns. We attribute these results to tax savings on existing undistributed foreign earnings, enhanced opportunities for international expansion, and cultural biases against tax planning. Spillovers to the US (through tax or firm competition) appear insignificant. [ABSTRACT FROM AUTHOR]

This article estimates tax reaction function of local governments competing with other governments to provide the insight for tax policy decision makers. Employing a panel of county-level data in all the states from 1970 to 2006, this article analyzes sales tax competition between county governments. In addition to a static model, this article pays more attention to dynamics in tax reaction function estimated by general methods of moments containing lagged dependent variables in the reaction function. Focusing on county governments, this article finds evidence for strategic interaction, an interaction that has positive effects on the setting of tax rates in a county. [ABSTRACT FROM AUTHOR]

This paper challenges the view that tax base equalization by the so-called representative tax system (RTS) removes inefficient undertaxation in corporate tax competition. The innovation of the paper is that it focuses on a tax on corporate income, instead of the unit tax on capital considered in previous studies. We employ a tax competition model with fiscal equalization and show that the RTS fails to fully internalize pecuniary and fiscal externalities. As a consequence, the RTS yields inefficiently low tax rates in the Nash equilibrium of the tax competition game between governments. Tax revenue equalization performs even worse, but combined with equalization of private income it implements the efficient tax rates on corporate income. [ABSTRACT FROM AUTHOR]

Many academics and policymakers agree that implicit tax subsidies for maritime fuels — which are currently granted around the world — are inefficient, but that their abolishment requires a unanimous international agreement. Such an agreement is deemed indispensable because any unilateral action would be impossible due to massive tax competition in this industry, competitiveness effects and the legal limits on regulating an industry operating mostly in international waters, thus outside of any state’s jurisdiction. However, an international agreement to solve these problems has proven impossible to reach, thus resulting in the conservation of the status quo. To break this deadlock, we propose a mechanism whereby a small coalition of countries, to start with, can abolish these implicit tax subsidies even in the absence of an international agreement. This incentive-compatible scheme solves the above-mentioned issues. The mechanism is furthermore designed to avoid locking in a sub-global scheme. Instead, it has the potential to contribute to unlocking the gridlock in negotiations over a global agreement on this matter. [ABSTRACT FROM AUTHOR]

Copyright of Politische Vierteljahresschrift is the property of Springer Nature and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Tax effort is a measure of a government’s effort to collect taxes. This study explores what impacts both vertical and horizontal incentives have on local governments’ tax efforts in China. For consistency with the literature, we first include typical economic and institutional factors in our analysis. We find that the effects of economic factors on local tax efforts are significant, but the effects of institutional factors tend to be weak. Fiscal decentralization, as a vertical incentive, has a significantly positive effect on tax efforts at the provincial level. Meanwhile, fiscal interaction, as a horizontal incentive, is also taken into account in a spatial specification to explain tax competition among local governments. The results show that local tax effort in China also depends on the horizontal incentive. Hence, to improve local tax effort, the central government should let the locals have more autonomy in collecting taxes and evaluate local tax effort by referring to tax collection in adjacent provinces simultaneously. [ABSTRACT FROM PUBLISHER]

Abstract: Climate policy exemptions for energy‐intensive sectors are often justified with distributional concerns. One concern is that households employed in energy‐intensive sectors might be affected disproportionally because of (international) capital mobility. By assuming that workers cannot move freely between sectors, we can reproduce this concern: uniform climate policy causes more inequality between the sectors when capital is mobile than when it is not. However, we find that affected households can be relieved more effectively with sector‐specific labour taxes than with sector‐specific climate policy. The reason for this finding is that households benefit more directly from sector‐specific labour tax cuts than from climate policy exemptions. Keeping climate policy uniform across sectors has the added benefit of creating incentives for long‐term decarbonisation. In addition, we find that the differential effect of capital mobility depends on the government's degree of inequality aversion – redistribution is more expensive when capital is mobile. [ABSTRACT FROM AUTHOR]

With the expansion of globalization, economic integration and the mobility of production factors at the local and global level have been facilitated. In Europe, the process of economic and monetary integration began when barriers to the free movement of goods, capital and labor were formally abolished, although cultural barriers still exist. The need and justification of tax competition is that it can lead to greater efficiency in the use of public sector resources and more efficient allocation of capital. The main advantages of tax competition are those related to the reduction of tax rates, which can lead to boosting consumption and investment. The method used to achieve the objective is complex, from statistical and economic analyzes of fiscal data to a comparative technique at the level of the European Union. The database used is from Eurostat sources and other European Commission work on taxation in the Member States of the European Union. [ABSTRACT FROM AUTHOR]

The article treats European fiscal policy and the taxes harmonization evolution process. The study is divided into three chapters: the first one makes a synthesis of European taxation, Member States fiscal behavior and a division of the countries according to the category of taxes which are these based; the second chapter go into details of "tax harmonization" conceptas European objective and analyzes its implementation status referring to direct and indirect taxes, and the last part refers to tax competitiveness and its interference with harmonized taxes. Finally, the main conclusions of the article are extracted. [ABSTRACT FROM AUTHOR]

This article studies how agglomeration economies affect tax competition between local jurisdictions. We develop a theoretical model with two main testable predictions: in a setting where agglomeration forces lessen the responsiveness of capital to tax, high-regime agglomeration jurisdictions should adopt a rent-taxing behavior, and they should react less to their neighbors' tax policies. The panel dataset spans the period from 1995 to 2007 and focuses on the local business taxes set at the French mid-subnational jurisdiction level of départements. First, instrumental variables estimates indicate that attractive jurisdictions capture a significant part of firms' agglomeration rent by levying higher tax rates. An increase by 1% of the localization economies indicator (a specialization index) leads to increasing the business tax rate by 0.43%. Second, local tax setting behaviors are characterized by a mimetic behavior, with best response functions that slope upwards. We propose a two-agglomeration-regime spatial lag model to estimate through ML the relationship between tax competition and attractiveness. Our main result shows that both are linked and tax mimicry is less pronounced if a jurisdiction is agglomerated. Specifically, in response to a decrease in the tax rate of neighboring local governments by 1%, local governments with strong agglomeration economies reduce their tax rate by 0.4% against 0.6% for local government characterized by a low-agglomeration regime. We show that the classical one-size-fits-all-case of a single regime of agglomeration suffers from a 40% downward bias for low-agglomeration jurisdictions. We draw the link to policy praxis by discussing the optimal design of equalization schemes. [ABSTRACT FROM AUTHOR]