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Globalization and tax policy

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  • Neumann, Rebecca
  • Holman, Jill
  • Alm, James

Abstract

Globalization is thought to reduce the ability of governments to collect taxes. If labor and capital can move between jurisdictions, then attempts to tax these factors will lead to a "vanishing taxpayer" as factors flee from high- to low-tax regions. More broadly, globalization suggests that there will be some convergence in tax rates across countries. This paper questions this view by examining the impact of globalization on taxation using a two-country, two-factor, two-good model. In particular, we ask how globalization, measured by increased international factor mobility, affects the ability of governments to tax factors. Our quantitative analysis indicates that, while increased mobility reduces revenues to some extent, governments still retain significant ability to collect taxes.

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Bibliographic Info

Article provided by Elsevier in its journal The North American Journal of Economics and Finance.

Volume (Year): 20 (2009)
Issue (Month): 2 (August)
Pages: 193-211

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Handle: RePEc:eee:ecofin:v:20:y:2009:i:2:p:193-211

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Web page: http://www.elsevier.com/locate/inca/620163

Related research

Keywords: Globalization International factor mobility Tax competition;

References

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Citations

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Cited by:
  1. Mark Skidmore & Mehmet Serkan Tosun, 2005. "Cross-Border Shopping and the Sales Tax: A Reexamination of Food Purchases in West Virginia," Working Papers 05-07, UW-Whitewater, Department of Economics.
  2. Jolanta Galuszka, 2013. "The Fiscal Union as a Remedy For the Economic and Financial Crisis in the European Union," Equilibrium, Uniwersytet Mikolaja Kopernika, vol. 8, pages 49-67.
  3. James Alm & Mir Ahmad Khan, 2008. "Assessing Enterprise Taxation and the Investment Climate in Pakistan," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0810, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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