The Taxation of Financial Capital under Asymmetric Information and the Tax-Competition Paradox
AbstractThis paper examines information sharing between governments in an optimal taxation framework. We present a taxonomy of alternative systems of international capital income taxation and characterize the choice of tax rates and information exchange. The model reproduces the conclusion of the previous literature that integration of international capital markets may lead to the under-provision of publicly provided goods. However, contrary to the existing literature under-provision occurs because of inefficiently coordinated expectations. We show that there exists a second equilibrium with an efficient level of public good provision and complete and voluntary information exchange between national tax authorities.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1074.
Date of creation: 2003
Date of revision:
tax competition; information exchange;
Other versions of this item:
- Wolfgang Eggert & Martin Kolmar, 2004. "The Taxation of Financial Capital under Asymmetric Information and the Tax-competition Paradox," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(1), pages 83-106, 03.
- Wolfgang Eggert & Martin Kolmar, 2003. "The Taxation of Financial Capital under Asymmetric Information and the Tax-Competition Paradox," CoFE Discussion Paper 03-07, Center of Finance and Econometrics, University of Konstanz.
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
- F20 - International Economics - - International Factor Movements and International Business - - - General
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
This paper has been announced in the following NEP Reports:
- NEP-ACC-2004-05-02 (Accounting & Auditing)
- NEP-ALL-2004-05-02 (All new papers)
- NEP-FIN-2004-05-02 (Finance)
- NEP-PBE-2004-05-02 (Public Economics)
- NEP-PUB-2004-05-02 (Public Finance)
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