Enhanced Coorporation in an asymmetric model of Tax Competition
AbstractThis paper analyzes enhanced cooperation agreements in corporate taxation in a three country tax competition model where countries differ in size. We characterize equilibrium tax rates and the optimal tax responses due to the formation of an enhanced cooperation agreement. Conditions for strategic complementarity or strategic substitutability of tax rates are crucial for the welfare effects of enhanced cooperation. Simulations show that enhanced cooperation is unlikely to be feasible for small countries. When enhanced cooperation is feasible, it may hamper global harmonization. Only when countries are of similar size is global harmonization a feasible outcome.
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Bibliographic InfoPaper provided by Oxford University Centre for Business Taxation in its series Working Papers with number 1002.
Date of creation: 2010
Date of revision:
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Tax coordination; Asymmetry; Enhanced Cooperation Agreements; Strategic Tax Response;
Other versions of this item:
- Hendrik Vrijburg & Ruud A. de Mooij, 2010. "Enhanced Cooperation in an Asymmetric Model of Tax Competition," Tinbergen Institute Discussion Papers 10-011/3, Tinbergen Institute.
- Hendrik Vrijburg & Ruud A. De Mooij, 2010. "Enhanced Cooperation in an Asymmetric Model of Tax Competition," CESifo Working Paper Series 2915, CESifo Group Munich.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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