TAX INCIDENCE, MAJORITY VOTING AND CAPITAL MARKET INTEGRATION

Ben Lockwood and Miltiadis Makris

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: We re-examine, from a political economy perspective, the standard view that higher capital mobility results in lower capital taxes - a view, in fact, that is not confirmed by the available empirical evidence. We show that when a small economy is opened to capital mobility, the change of incidence of a tax on capital - from capital owners to owners of the immobile factor - may interact in such a way with political decision-making so as to cause a rise in the equilibrium tax. This can happen whether or not the fixed factor (labour) can be taxed.

Pages: 27 pages
Date: 2004
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Citations: View citations in EconPapers (2)

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https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp712.pdf

Related works:
Journal Article: Tax incidence, majority voting and capital market integration (2006)
Working Paper: Tax Incidence, Majority Voting and Capital Market Integration (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:712

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