Information sharing and tax competition among governments
AbstractThe residence-based principle has been proposed as a second-best measure to the full international coordination of capital tax policies. A basic requirement for this system to work is that tax authorities have full information about the foreign investments of their residents. The degree of information transmission among governments can be considered as a variable used strategically in the same way taxes are, however. We show that under some features of the tax system there will not be any information sharing, while there are institutional arrangements under which governments will transmit partial information for strategic purposes. We also show that full information sharing is not necessarily a Pareto optimum. Our conclusion is that the informational behaviour of governments is crucial and should be taken into account when designing the optimal international tax system.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of International Economics.
Volume (Year): 39 (1995)
Issue (Month): 1-2 (August)
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Web page: http://www.elsevier.com/locate/inca/505552
Other versions of this item:
- Philippe Bacchetta & Maria Paz Espinosa, 1993. "Information Sharing and Tax Competition Among Governments," CEPR Financial Markets Paper 0028, European Science Foundation Network in Financial Markets, c/o C.E.P.R, 77 Bastwick Street, London EC1V 3PZ.
- Bacchetta, P. & Paz Espinosa, M., 1992. "Information Sharing and Tax Competition Among Governments," UFAE and IAE Working Papers 173.92, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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