A General Model of International Tax Competition with Applications

Helmuts Azacis and David Collie

No E2021/31, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: A general version of the ZMW model of international tax competition is presented that confirms and extends the results of the existing literature about the choice of tax policy instruments in the symmetric case when the tax externality is positive for both countries. In the asymmetric case when the tax externality is positive for one country and negative for the other country, it is shown that the results are reversed. This demonstrates the importance of the sign of the tax externality in models of international tax competition. This general model is then used to analyse a couple of policy-relevant applications: depreciation allowances and interest payment deductibility.

Keywords: Tax Competition; Proportional Taxes; Per-Unit Taxes; Capital Taxes. (search for similar items in EconPapers)
JEL-codes: C72 F21 F23 F53 H21 H25 H77 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2021-12
New Economics Papers: this item is included in nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:cdf:wpaper:2021/31

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