Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/101603 
Year of Publication: 
1996
Series/Report no.: 
Diskussionsbeiträge - Serie II No. 315
Publisher: 
Universität Konstanz, Sonderforschungsbereich 178 - Internationalisierung der Wirtschaft, Konstanz
Abstract: 
The paper analyzes the optimal mix of capital and wage taxation when policymakers maximize the political support of workers and capitalists, subject to a fixed revenue requirement. Capital market integration increases the efficiency costs of a tax on capital but simultaneously changes the political equilibrium through its effect on the distribution of factor incomes. These distributional effects are directly opposed in the capital importing and the capital exporting region. While the capital tax rate will always be lowered in the capital importing region, the tax rate in the exporting country will rise when the political resistance to market-induced changes in the distribution of income is sufficiently high.
Subjects: 
capital tax competition
income distribution
JEL: 
H21
H22
F15
D33
Document Type: 
Working Paper

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