On the Sustainability of Partial Tax Harmonization among Asymmetric Countries
AbstractThis paper investigates the conditions under which partial harmonization for capital taxation is sustained in a repeated interactions model of tax competition when there are three countries asymmetric in repect to their capital endowments. We show that regardless of the structure of the coalition (i.e., any group of asymmetric countries), whether partial tax harmonization is sustainable or not crucially depends on the capital endowment of the median country relative to those of the large and small countries. The most noteworthy finding is that the closer the capital endowment of the median country to the average capital endowment of the large and small countries, the less likely is the tax harmonization including the median country to prevail and the more likely is the partial tax harmonization excluding the median country to prevail
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Bibliographic InfoPaper provided by Australian National University, College of Business and Economics, School of Economics in its series ANU Working Papers in Economics and Econometrics with number 2011-540.
Length: 38 Pages
Date of creation: Mar 2011
Date of revision:
Find related papers by JEL classification:
- H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
- F59 - International Economics - - International Relations and International Political Economy - - - Other
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
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