Tax Competition in an Expanding European Union

Ronald Davies and Johannes Voget ()
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Johannes Voget: Oxford University Centre for Business Taxation

No 830, Working Papers from Oxford University Centre for Business Taxation

Abstract: This paper empirically examines whether expansion of the EU has increased international tax competition. To do so, we use a simple model of tax competition to determine how a given country weights the taxes of others when choosing its own tax. This indicates that the market potential of a country (which includes both domestic consumption and exports) is the appropriate weight. This is an improvement on the ad-hoc and often endogenous weighting schemes used elsewhere. Unlike those studies, we find robust evidence for tax competition. In particular, our estimates suggest that EU membership affects responses with EU members responding more to the tax rates of other members. This lends credence to the above-noted concerns.

Keywords: Corporate taxation; Tax Competition, European Union (search for similar items in EconPapers)
JEL-codes: F1 H2 H7 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-eec and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (51)

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Related works:
Working Paper: Tax Competition in an Expanding European Union (2011)
Working Paper: Tax Competition in an Expanding European Union (2009)
Working Paper: Tax competition in an expanding European Union (2008)
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