Optimal Income Taxation with Tax Competition

Vilen Lipatov, Alfons J. Weichenrieder and Alfons Weichenrieder
Authors registered in the RePEc Author Service: Alfons J. Weichenrieder

No 3108, CESifo Working Paper Series from CESifo

Abstract: We introduce tax competition for mobile labor into an optimal-taxation model with two skill levels. We analyze a symmetric subgame-perfect Nash equilibrium of the game between two governments and two taxpayer populations. Tax competition reduces the distortion from the informational asymmetry and increases employment of the less productive individuals. When countries are heterogeneous, this effect is more pronounced in the smaller country.

Keywords: optimal income tax; migration; unemployment; tax competition; Leviathan government (search for similar items in EconPapers)
JEL-codes: F22 H21 (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Working Paper: Optimal income taxation with tax competition (2012)
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