Mobile tax base as a global common

Konrad, Kai A.

doi:10.1007/s10797-008-9075-y

Cited by 25 publications

(19 citation statements)

References 56 publications

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“…23 An economic model dealing with the state-directed strengthening of these factors is put forward by Konrad (2008). In his model, countries can invest in the loyalty of their taxpayers which alters the outcome of tax competition between countries.…”

Section: Resultsmentioning

confidence: 99%

The Influence of Altruistic Preferences on the Race to the Bottom of Welfare States

Hendel

2014

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Common tax competition models suggest that welfare states will undercut each other's tax rate to attract taxpayers and keep welfare recipients at bay. This will lead to a zero-taxation outcome in the absence of migration costs or other barriers to migration. This paper develops a twocountry framework with mobile altruistic taxpayers and immobile welfare recipients. It shows that under the assumption of taxpayers motivated by warm glow altruism, tax competition leads to unique pure strategy Nash equilibria in taxation which are dierent from zero given suciently strong altruistic preferences. If countries are asymmetric with respect to the number of welfare recipients, pure altruism and inequity aversion preferences support additional unique pure strategy Nash equilibria in which the country with the fewer poor attracts more taxpayers and sets higher taxes. This implies that rich countries may benet from tax competition. JEL Classication: H73, D64, H20

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Section: Resultsmentioning

confidence: 99%

The Influence of Altruistic Preferences on the Race to the Bottom of Welfare States

Hendel

2014

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“…13 The utility gain for a typical shopper of jurisdiction k of an additional firm located in that jurisdiction is captured parametrically by α ≥ 1. The net utility from each purchase is α−1 (recall that all prices have been set equal to one).…”

Section: The Structure Of the Modelmentioning

confidence: 99%

“…There is, thus, a loop argument between firms and shoppers (shoppers are attracted 4 It has to be noted that this is not, of course, the only dimension over which jurisdictions can differentiate themselves. For an alternative view-and one that is based on 'persuasive advertising'-see the recent contribution of Konrad (2008). 5 Though the tax competition literature is fairly sizeable it has paid no attention to two sided-markets.…”

Section: Introductionmentioning

confidence: 99%

Public Goods and Tax Competition in a Two-Sided Market

Kotsogiannis

Serfes

2008

SSRN Journal

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A rather neglected issue in the tax competition literature is the dependence of equilibrium outcomes on the presence of firms and shoppers (two-sided markets). Making use of a model of vertical and horizontal differentiation, within which jurisdictions compete by providing public goods and levying taxes in order to attract firms and shoppers, this paper characterizes the non-cooperative equilibrium. It also evaluates the welfare implications for the jurisdictions of a popular policy of tax coordination: The imposition of a minimum tax. It is shown that the interaction of the two markets affects the intensity of tax competition and the degree of optimal vertical differentiation chosen by the competing jurisdictions. Though the non-cooperative equilibrium is, as it is typically the case, inefficient such inefficiency is mitigated by the strength of the interaction in the two markets. A minimum tax policy is shown to be effective when the strength of the interaction is weak and ineffective when it is strong.

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“…Imagine an economy with J ≥ 2 countries or regions indexed by j, j =1,…, J. In contrast to Janeba and Peters (1999), as well as to the bulk of the existing related literature like Andersson and Konrad (2001), Wilson (2005b), or Konrad (2007), our general framework allows for the possibility of more than two countries competing for mobile capital. Also, we will derive the relation between tax payments and tax rates for a firm located in a particular country, whereas Janeba and Peters (1999) assume a tax function with particular properties.…”

Section: The Basic Modelmentioning

confidence: 99%

Why Do Most Countries Set High Tax Rates on Capital?

2007

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We consider tax competition in a world with tax bases exhibiting different degrees of mobility, modeled as mobile and immobile capital. An agreement among countries not to give preferential treatment to mobile capital results in an equilibrium where mobile capital is nevertheless taxed relatively lightly. In particular, one or two of the smallest countries, measured by their stocks of immobile capital, choose relatively low tax rates, thereby attracting mobile capital away from the other countries, which are then left to set revenuemaximizing taxes on their immobile capital. This conclusion holds regardless of whether countries choose their tax policies sequentially or simultaneously. In contrast, unrestricted competition for mobile capital results in the preferential treatment of mobile capital by all countries, without cross-country differences in the taxation of mobile capital. Nevertheless our main result is that the non-preferential regime generates larger expected global tax revenue, despite the sizable revenue loss from the emergence of low-tax countries. By extending the analysis to include cross-country differences in productivities, we are able to resurrect a case for preferential regimes, but only if the productivity differences are sufficiently large.

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Mobile tax base as a global common

Cited by 25 publications

References 56 publications

The Influence of Altruistic Preferences on the Race to the Bottom of Welfare States

The Influence of Altruistic Preferences on the Race to the Bottom of Welfare States

Public Goods and Tax Competition in a Two-Sided Market

Why Do Most Countries Set High Tax Rates on Capital?

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