Optimal Cooperative Taxation in the Global Economy

V. V. Chari, Juan Pablo Nicolini and Pedro Teles

Journal of Political Economy, 2023, vol. 131, issue 1, 95 - 130

Abstract: How should countries cooperate in setting fiscal and trade policies when government expenditures must be financed with distorting taxes? We show that even if countries cannot make explicit transfers to each other, every point on the Pareto frontier is production efficient, so that international trade and capital flows should be effectively free. Trade agreements must be supplemented with fiscal policy agreements. Residence-based income tax systems have advantages over source-based systems. Taxing all household asset income at a country-specific uniform rate and setting the corporate income tax to zero yield efficient outcomes. Value-added taxes should be adjusted at the border.

Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://dx.doi.org/10.1086/720889 (application/pdf)
http://dx.doi.org/10.1086/720889 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
Working Paper: Optimal Cooperative Taxation in the Global Economy (2022)
Working Paper: Optimal cooperative taxation in the global economy (2022)
Working Paper: Optimal Cooperative Taxation in the Global Economy (2019)
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:ucp:jpolec:doi:10.1086/720889

Access Statistics for this article

More articles in Journal of Political Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().