Relaxing Tax Competition through Public Good Differentiation

Benjamin Zissimos and Myrna Wooders

No 269630, Economic Research Papers from University of Warwick - Department of Economics

Abstract: This paper argues that, because governments are able to relax tax competition through public good differentiation, traditionally high-tax countries have continued to set taxes at a relatively high rate even as markets have become more integrated. The key assumption is that firms vary in the extent to which public good provision reduces costs. We show that Leviathan governments are able to use this fact to relax the forces of tax competition, reducing efficiency. When firms can ‘vote with their feet’ tax competition leads firms to locate in ‘too many’ jurisdictions. A ‘minimum tax’ further relaxes tax competition, further reducing efficiency.

Keywords: Financial Economics; Public Economics (search for similar items in EconPapers)
Pages: 45
Date: 2005-10-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Relaxing Tax Competition through Public Good Differentiation (2006)
Working Paper: Relaxing Tax Competition through Public Good Differentation (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269630

DOI: 10.22004/ag.econ.269630

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