Regional Tax Coordination and Foreign Direct Investment

Ian Wooton () and Andreas Haufler

No 3063, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This Paper analyses the effects of a regionally coordinated profit tax in a model with three active countries, one of which is not part of the union, and a globally mobile firm. We show that regional tax coordination can lead to two types of welfare gains. First, for investments that would take place in the region in the absence of coordination, this measure can transfer location rents from the firm to the union. Second, by internalizing all of the union's benefits from foreign direct investment, a coordinated policy attracts more investment than when member states act in isolation. Consequently, tax levels may rise or fall under regional coordination.

Keywords: Tax competition; Regional coordination; International investment (search for similar items in EconPapers)
JEL-codes: F15 F23 H73 H87 (search for similar items in EconPapers)
Date: 2001-11
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Regional Tax Coordination and Foreign Direct Investment (2003)
Working Paper: Regional Tax Coordination and Foreign Direct Investment (2002)
Working Paper: Regional Tax Coordination and Foreign Direct Investment (2001)
Working Paper: Regional Tax Coordination and Foreign Direct Investment (2001)
Working Paper: Regional tax coordination and foreign direct investment (2001)
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