Tax Uniformity: A Commitment Device for Restraining Opportunistic Behavior

Gerda Dewit and Dermot Leahy

Journal of Public Economic Theory, 2015, vol. 17, issue 5, 641-672

Abstract: We show that uniform and differentiated tax systems diverge in their propensity to generate distortionary opportunistic behavior. First, when firms choose investment before the government can commit to its taxes, the tax scheme creates strategic incentives for firms to distort their investment. Second, a system of differentiated taxes has a greater propensity to foster strategic distortions in investment than a uniform tax regime. While the paper makes these points in a set-up in which polluting firms face an emission tax and invest in abatement, the main message is shown to hold for a wide class of tax policy games.

Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1111/jpet.12104 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Tax uniformity: A commitment device for restraining opportunistic behaviour (2008)
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:bla:jpbect:v:17:y:2015:i:5:p:641-672

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().