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Taxing capital and labor when both factors are imperfectly mobile internationally

Hippolyte d'Albis () and Agnès Benassy-Quere ()

PSE Working Papers from HAL

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 a_ects the taxation of both factors, and that the race-to-the-bottom narrative (with burden shifting) applies essentially to capital exporting countries. We test our predictions for a panel of 28 OECD countries over 1997-2014. We _nd capital taxation to be less sensitive to capital mobility in net capital importing countries than for net capital exporters. Various robustness checks support this conclusion. Qantitatively, though, rising capital mobility contributes much less than population ageing to the decline of capital tax rates over the period studied.

Keywords: tax competition; globalization; imperfect factor mobility (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-pbe and nep-pub
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-02295406
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Working Paper: Taxing capital and labor when both factors are imperfectly mobile internationally (2019) Downloads
Working Paper: Taxing capital and labor when both factors are imperfectly mobile internationally (2018) Downloads
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