Globalization and International Tax Competition: Empirical Evidence Based on Effective Tax Rates

Lucas Bretschger and Frank Hettich
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Frank Hettich: Infraserv GmbH & Co Höchst KG

Journal of Economic Integration, 2005, vol. 20, 530-542

Abstract:

Previous work showing a positive impact of globalization on capital tax revenue as a percent of GDP claims to contradict theoretical results that tax competition pressures governments to reduce taxes on highly mobile assets. However, the observed relationship is not necessarily incompatible with the predictions of tax competition literature, as the internationalization of markets also affects the capital tax base. Measuring taxes by effective tax rates instead of tax revenue for a panel of 12 OECD countries in the period 1967-96, we find that globalization has a negative impact on capital taxes, which is exactly what the theory predicts.

Keywords: Tax competition; Empirical evidence; Panel data; OECD countrie (search for similar items in EconPapers)
JEL-codes: C23 H70 H87 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0328

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