Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76806
Authors: 
Baskaran, Thushyanthan
Lopes da Fonseca, Mariana
Year of Publication: 
2013
Series/Report no.: 
Discussion Papers, Center for European Governance and Economic Development Research 163
Abstract: 
We survey the theoretical and empirical literature on local and international tax competition in Economics. Based on this survey, we discuss whether EU countries should harmonize tax policies to prevent a race to the bottom. Much of the evidence suggests that tax competition does not lead to significant reductions in tax revenues. Therefore, we conclude that tax coordination is in all likelihood unnecessary to prevent inefficiently low levels of taxation in the EU. But since the evidence against adverse effects of tax competition is not unambiguous, we also discuss whether intergovernmental transfers might be a less invasive means than outright tax harmonization to prevent a race to the bottom.
Subjects: 
Tax competition
Tax coordination
European Union
Fiscal federalism
JEL: 
F59
H26
H77
Document Type: 
Working Paper

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