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Title:Strategic delegation and international capital taxation PDF Logo
Authors:Brückner, Matthias
Issue Date:2001
Series/Report no.:ZEI working paper B 22-2001
Abstract:The literature on tax competition generally concludes that international coordination of capital taxes among symmetric countries increases tax rates. This paper investigates whether this conclusion also holds in a political economy framework where taxes are set by elected policy makers. It shows that policy makers are fiscally more liberal than the average citizen if taxes are set non-cooperatively. However, fiscally more conservative policy makers are elected if taxes are set cooperatively. The introduction of tax coordination cannot remove the incentive to compete for foreign capital, but simply shifts it to the election stage. The paper proves that with standard specifications of the utility functions, coordination leads to lower tax rates than competition.
Subjects:Tax competition
tax coordination
strategic delegation
Document Type:Working Paper
Appears in Collections:ZEI Working Papers, Zentrum für Europäische Integrationsforschung, Universität Bonn

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