Residence-Based Capital Taxation in a Small Open Economy: Why Information is Voluntarily Exchanged and Why it is Not
AbstractThe issue of capital tax competition is viewed to be unproblematic if residence-based capital-taxation exists. However, the sustainability of residence-based capital taxation depends on the exchange of information about foreign financial investments between tax authorities. This paper analyzes the incentives of tax authorities to voluntarily provide information. We show that voluntary information exchange is an equilibrium in a standard small-country model of tax competition, whereas it may not be an equilibrium when the size of the financial sector has a positive impact on the wage structure of an economy. 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
tax competition; information exchange;
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