Tax competition and tax harmonization with evasion

Nestor Gandelman and Ruben Hernandez-Murillo

No 2002-015, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We examine a two-jurisdiction tax competition environment where local governments can only imperfectly monitor where agents pay taxes and risk-averse individuals my choose to cross borders to pay lower taxes in a neighboring location. ; In the game between local authorities, when communities differ in size, in equilibrium the smaller community sets lower taxes and attracts agents from the larger jurisdiction. With identical communities, tax rates must be equal. Whenever the smaller community benefits from tax harmonization, the larger one will also. ; If the high-tax community chooses a monitoring policy, the local population splits into groups of tax avoidance and compliance.

Keywords: Taxation; Competition (search for similar items in EconPapers)
Date: 2002
New Economics Papers: this item is included in nep-pub and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://s3.amazonaws.com/real.stlouisfed.org/wp/2002/2002-015.pdf Full text (application/pdf)

Related works:
Journal Article: Tax Competition and Tax Harmonization With Evasion (2004)
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:fip:fedlwp:2002-015

Ordering information: This working paper can be ordered from

DOI: 10.20955/wp.2002.015

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Scott St. Louis ().