Taxing capital and labor when both factors are imperfectly mobile internationally

Hippolyte d'Albis and Agnès Benassy-Quere

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Abstract: We revisit the standard theoretical model of tax competition to consider imperfect mobility of both capital and labor. We show that the mobility of one factor affects the taxation of both factors and that the "race-to-the-bottom" narrative (with burden shifting) applies essentially to capital-exporting countries. We validate our predictions using a panel of 29 OECD countries over the period of 1997–2017. The quantitative contribution of rising capital mobility to the decline of corporate income tax rates over our sample period is nonetheless less than that of population ageing.

Keywords: Tax competition; Globalization; Imperfect factor mobility (search for similar items in EconPapers)
Date: 2022-02
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Published in International Tax and Public Finance, 2022, 29 (1), pp.147-190. ⟨10.1007/s10797-021-09663-4⟩

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Related works:
Journal Article: Taxing capital and labor when both factors are imperfectly mobile internationally (2022)
Working Paper: Taxing capital and labor when both factors are imperfectly mobile internationally (2022)
Working Paper: Taxing capital and labor when both factors are imperfectly mobile internationally (2021)
Working Paper: Taxing capital and labor when both factors are imperfectly mobile internationally (2021)
Working Paper: Taxing capital and labor when both factors are imperfectly mobile internationally (2019)
Working Paper: Taxing capital and labor when both factors are imperfectly mobile internationally (2019)
Working Paper: Taxing capital and labor when both factors are imperfectly mobile internationally (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-03672250

DOI: 10.1007/s10797-021-09663-4

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