Who benefits from partial tax coordination?

Yutao Han ()
Additional contact information
Yutao Han: CREA, Université du Luxembourg

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: 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 harmonization 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 is at odds with a classical result that a high tax country benefits from the imposition of a lower tax bound.

Keywords: Tax competition; infrastructure competition; partial tax coordination; social welfare (search for similar items in EconPapers)
JEL-codes: C72 F21 H21 H73 H87 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://hdl.handle.net/10993/9478 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:13-24

Access Statistics for this paper

More papers in DEM Discussion Paper Series from Department of Economics at the University of Luxembourg Contact information at EDIRC.
Bibliographic data for series maintained by Marina Legrand ().