On Tax Competition: The (Un-)Expected Advantages of Decentralized Fiscal Autonomy

Lars Feld

No 200425, Marburg Working Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: Tax competition is much discussed in the political arena these days. Although it is not a new phenomenon, the political pressure has increased to restrict tax competition by intensifying tax coordination and accomplishing tax harmonization. This particularly holds for the EU which has established a Code of Conduct for business taxation in 1997 and is about to establish a system of information exchange with respect to capital income taxation (allowing Austria, Belgium and Luxembourg a minimum source tax on capital income as an alternative). In 2001, the Commission has additionally released the so called ‚Ruding II‘-report in which a uniform corporate tax base with formulary apportionment is proposed for the EU. In addition, the OECD (1998) aims at stronger tax coordination among its members also favoring a system of information exchange. Such a system would necessarily involve the abolishment of (or the reduction of the strictness of) bank secrecy laws around the world (Feld 2002).

Pages: 23 pages
Date: 2004
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Citations: View citations in EconPapers (2)

Forthcoming in KURT LEUBE (ed.), Austrian Economics Today II: Reforms for a Competitive Economy, FAZ Buch, Frankfurt 2004

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