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Are Moderate Leviathans Harmful to Tax Coordination?

Jun-ichi Itaya () and Yamaguchi Chikara

No 325, Discussion paper series. A from Graduate School of Economics and Business Administration, Hokkaido University

Abstract: This paper investigates how the sustainability of partial tax coordination between several governments is affected when the governments' objective function is moderate Leviathan in that policymakers are neither entirely benevolent nor fully self-interested. We show that partial tax coordination is more likely to prevail when moderate Leviathan-type governments become more revenue-maximizing Leviathans. In this case, the increased intensity of fiscal externality due to different tax rates makes partial tax coordination more sustainable at the cost of the tax union member countries' well-being.

Keywords: Tax coordination; moderate Leviathan; tax competition (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pub
Date: 2018-05
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Persistent link: https://EconPapers.repec.org/RePEc:hok:dpaper:325

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