Pareto Efficiency in International Taxation

Michael Keen and David Wildasin

No 371, CESifo Working Paper Series from CESifo

Abstract: This paper addresses a key but neglected task in the theory of international taxation, lent increased urgency by growing awareness of the potential gains from tax coordination: the characterization of Pareto-efficient international tax regimes. It shows that the Diamond-Mirrlees theorem on the desirability of production efficiency, which underlies the key tenets of policy advice in international taxation ? the desirability of destination basis for commodity taxation, of the residence principle for capital income taxation, and of free trade ? is rendered inherently inapplicable to problems of international tax design by the distinctness of national budget constraints that is of the essence in thinking about international taxation. Conditions are established ? relating to the availability of explicit or implicit devices for reallocating tax revenues across countries ? under which production efficiency is nevertheless desirable, and a general characterization developed of the precise ways in which Pareto-efficient international taxation may require violation of established tenets.

JEL-codes: F00 H00 (search for similar items in EconPapers)
Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Working Paper: Pareto Efficiency in International Taxation (2001)
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