Lobbying and the International Fight Against Tax Havens

Tobias Hauck

Discussion Papers in Economics from University of Munich, Department of Economics

Abstract: Despite a variety of measures taken by high tax countries, the international fight against tax havens so far remained rather ineffective. This paper introduces lobbying as a possible explanation for this observation. I analyze the international fight against tax havens in a two country model in which the onshore country exerts pressure on domestic profit shifting firms and the low tax country lobbies against this measure. In this framework, I find that pressure and lobbying are strategic substitutes and that there is an extensive margin incentive for offshore lobbying. I also show that an increase in international integration leads to a decrease in the level of profit shifting, when starting out at high levels of international frictions. Finally, when allowing for a second low tax jurisdiction, the overall level of lobbying increases, but less than proportionally, as free-riding occurs.

Keywords: International Taxation; Tax Avoidance; Pressure Policies; Tax Havens; International Lobbying (search for similar items in EconPapers)
JEL-codes: F23 H25 H26 (search for similar items in EconPapers)
Date: 2018-04
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Lobbying and the international fight against tax havens (2019)
Working Paper: Lobbying and the international fight against tax havens (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenec:43213

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