Tax Competition and Fiscal Equalization
AbstractThis paper analyzes the relation between tax competition and fiscal equalization. In particular, it asks the question whether fiscal equalization schemes can mitigate inefficient tax competition. Two transfer schemes are considered: tax revenue and tax base equalization schemes. The paper shows that equalizing transfers may internalize fiscal externalities. In particular, in a small open economy tax base equalization yields efficient tax rates. Thus, transfer mechanisms with an explicit redistributive character do not always impair efficiency. Copyright Kluwer Academic Publishers 2002
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Bibliographic InfoArticle provided by Springer in its journal International Tax and Public Finance.
Volume (Year): 9 (2002)
Issue (Month): 4 (August)
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Web page: http://www.springerlink.com/link.asp?id=102915
capital tax competition; fiscal equalization; federal system;
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