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Who benefits from tax competition in the European Union?

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  • Leon Bettendorf

    ()

  • Joeri Gorter
  • Albert van der Horst

    ()

Abstract

Statutory tax rates have declined in the European Union in the recent decades. An applied general equilibrium model on corporate taxation sheds light on the economic and welfare implications of tax rate reforms. Domestic distortions proof highly relevant as even unilateral reductions of the corporate income tax rate might reduce welfare if the labour tax rate has to be increased. Profit shifting induces countries to underbid each others tax rates, but this effect is sizable only if two countries are closely linked. The harmful external effects of CIT rate reductions are limited, which reduces the need for European coordination of CIT rates.

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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Document with number 125.

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Date of creation: Aug 2006
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Handle: RePEc:cpb:docmnt:125

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Citations

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Cited by:
  1. Jens Brøchner & Jesper Jensen & Patrik Svensson & Peter Birch Sørensen, 2006. "The Dilemmas of Tax Coordination in the Enlarged European Union," Working Papers 2006-11, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
  2. Leon Bettendorf & Albert van der Horst & Ruud A. de Mooij & Hendrik Vrijburg, 2010. "Corporate tax consolidation and enhanced coorporation in the European Union," Working Papers 1001, Oxford University Centre for Business Taxation.
  3. Leon Bettendorf & Albert van der Horst & Ruud A. de Mooij, 2007. "Corporate Tax Policy and Unemployment in Europe: An Applied General Equilibrium Analysis," Tinbergen Institute Discussion Papers 07-056/2, Tinbergen Institute.
  4. Ruud de Mooij & Michael P. Devereux, 2009. "Alternative Systems of Business Tax in Europe: An applied analysis of ACE and CBIT Reforms," Taxation Papers 17, Directorate General Taxation and Customs Union, European Commission.
  5. Albert van der Horst & Leon Bettendorf & Hugo Rojas-Romagosa, 2007. "Will corporate tax consolidation improve efficiency in the EU?," CPB Document 141, CPB Netherlands Bureau for Economic Policy Analysis.
  6. Leon Bettendorf & Albert van der Horst, 2006. "Documentation of CORTAX," CPB Memorandum 161, CPB Netherlands Bureau for Economic Policy Analysis.
  7. Ruud de Mooij & M.P. Devereux, 2009. "An applied analysis of ACE and CBIT reform in the EU," CPB Discussion Paper 128, CPB Netherlands Bureau for Economic Policy Analysis.
  8. Jens Brøchner & Jesper Jensen & Patrik Svensson & Peter Birch Sørensen, 2006. "The Dilemmas of Tax Coordination in the Enlarged European Union," CESifo Working Paper Series 1859, CESifo Group Munich.
  9. Barrett, Alan & Barry, Frank & Van der Horst, Albert & Kearney, Ide & Lane, Philip R. & Nolan, Brian & O'Brien, Martin & Walsh, John R., 2007. "Budget Perspectives 2008," Research Series, Economic and Social Research Institute (ESRI), number BMI199 edited by Callan, Tim, September.
  10. Ruud de Mooij & Michael P. Devereux, 2009. "Alternative Systems of Business Tax in Europe: An applied analysis of ACE and CBIT Reforms," Taxation Studies 0028, Directorate General Taxation and Customs Union, European Commission.

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