Are Moderate Leviathans Harmful to Tax Coordination?

Jun-ichi Itaya (j-itaya@hokusei.ac.jp) and Chikara Yamaguchi

FinanzArchiv: Public Finance Analysis, 2020, vol. 76, issue 2, 165-190

Abstract: This study investigates how the sustainability of partial tax coordination among a subset of countries (i.e., a tax union) is affected when the governments' objective function is moderate Leviathan in that policymakers are neither entirely benevolent nor fully self-interested. We show that partial tax coordination is more likely to prevail either when moderate-Leviathan-type governments become more revenue-maximizing Leviathans or when more wasteful government expenditure is engaged in. Nevertheless, the well-being of the residents in the member countries of the tax union unambiguously deteriorates, while that in nonmember countries is ambiguous.

Keywords: tax coordination; moderate Leviathan; tax competition; repeated game (search for similar items in EconPapers)
JEL-codes: F59 H71 H73 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Are Moderate Leviathans Harmful to Tax Coordination? (2018)
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DOI: 10.1628/fa-2020-0003

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