International Spillovers of Taxiation

International Monetary Fund

No 1989/043, IMF Working Papers from International Monetary Fund

Abstract: This paper highlights key issues pertinent for the understanding of international effects of domestic tax policies and of international tax harmonization. The analytical framework adopts the saving-investment balance approach to the analysis of international economic interdependence focusing on income, consumption, and international borrowing. A simulation model is developed that is richer in structure than the two period analytical model. The analytical and simulation frameworks are used to analyze the consequences of revenue-neutral conversions between income and consumption (VAT) tax systems, the international effects of budget deficits and public-debt management, and the effects of international tax harmonization. We demonstrate that the effects of such changes in the structure of taxes depend critically on international differences in saving and investment propensities.

Keywords: WP; income tax; tax rate; rate of interest; tax conversion; income tax tax rate; demand schedule; VAT harmonization; income-tax rate; personal income; utility function; foreign country; Income tax systems; Consumption taxes; Consumption; Budget planning and preparation; Value-added tax; Europe (search for similar items in EconPapers)
Pages: 64
Date: 1989-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1989/043

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