What do Theories of Tax Competition Predict for Capital Taxes in EU Countries? A Review of the Tax Competition Literature

Signe Krogstrup

No 05-2002, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies

Abstract: The paper reviews the theoretical literature on capital tax competition relevant for capital taxation in the European Union. The basic tax competition model a la Zodrow and Mierzkowski (1986) is presented, and the arguments of the literature are subsequently integrated into the framework of the basic tax competition model. The review includes models of tax competition where countries are assumed large, asymmetric, when there are more than one tax instrument, where there are more than one tax base, when government is assumed self-serving, and where democratic elections and political equilibrium are allowed for. Moreover, the consequences of agglomeration economies for tax competition pressures are reviewed and incorporated into the standard tax competition model.

Keywords: Tax Competition; Capital Taxation; Capital Mobility; European Integration; Agglomeration (search for similar items in EconPapers)
Pages: 27
Date: 2002-11
New Economics Papers: this item is included in nep-com and nep-eec
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:gii:giihei:heiwp05-2002

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