Tax Competition and Migration: The Race-to-the-Bottom Hypothesis Revisited

Assaf Razin and Efraim Sadka

No 16670, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Oates reminds us that tax competition among localities in the presence of capital mobility, may lead to inefficiently low tax rates (and benefits). In contrast, the Tiebout paradigm suggests that tax competition yields an efficient outcome, so that there are no gains from tax coordination. This paper demonstrates that when a group of host countries faces an upward supply of migrants, labor and capital income tax rate under competition are higher than under tax coordination, due to a fiscal externality.

JEL-codes: F2 H2 (search for similar items in EconPapers)
Date: 2011-01
New Economics Papers: this item is included in nep-acc, nep-mic, nep-mig and nep-pbe
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as Assaf Razin and Efraim Sadka "Tax Competition and Migration: The Race ‐ to ‐ the ‐ Bottom Hypothesis Revisited" forthcoming in CESifo Economic Studies , Volume 58, Number 1, March 2012, Oxford University Press.

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Working Paper: TAX COMPETITION AND MIGRATION: THE RACE-TO-THE-BOTTOM HYPOTHESIS REVISITED (2011)
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