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Title:Enhanced cooperation in an asymmetric model of tax competition PDF Logo
Authors:Vrijburg, Hendrik
De Mooij, Ruud A.
Issue Date:2010
Series/Report no.:CESifo working paper 2915
Abstract:This paper analyzes enhanced cooperation agreements in corporate taxation in a three country tax competition model where countries differ in size. We characterize equilibrium tax rates and the optimal tax responses due to the formation of an enhanced cooperation agreement. Conditions for strategic complementarity or strategic substitutability of tax rates are crucial for the welfare effects of enhanced cooperation. Simulations show that enhanced cooperation is unlikely to be feasible for small countries. When enhanced cooperation is feasible, it may hamper global harmonization. Only when countries are of similar size is global harmonization a feasible outcome.
Subjects:tax coordination
asymmetry
enhanced cooperation agreements
strategic tax response
JEL:E62
F21
H25
H77
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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