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Tax Enforcement Policy and the Provision of Public Goods with the Presence of Tax Havens

Hsun Chu ()

MPRA Paper from University Library of Munich, Germany

Abstract: A tax competition model is presented to investigate the effects of tax havens on the public good provision. We show that when countries facing a rise in tax havens change their tax enforcement strategies in response, the existence of tax havens may result in a higher level of equilibrium public good provision as compared to the case with no tax havens. Accordingly, tax havens could be welfare-enhancing for non-haven countries. This result offers a possible explanation for the recent empirical evidence that the corporate tax revenues in high-tax countries have actually increased with the growth in the flow of FDI to tax havens.

Keywords: tax havens; enforcement policy; tax competition (search for similar items in EconPapers)
JEL-codes: F23 H26 H41 (search for similar items in EconPapers)
Date: 2013-04, Revised 2013-11
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
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Journal Article: Tax Enforcement Policy and the Provision of Public Goods with the Presence of Tax Havens (2014) Downloads
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