The right-wing power of small countries
AbstractThis paper investigates the political implications of tax competition between countries of different sizes. We show that smaller countries competing for internationally mobile capital would set lower tax rates than their larger counterparts when run by similar governments. Moreover, small-country governments are actually politically to the right of those in larger countries, adding a second reason for lower tax rates in the former. Then a higher number of small countries competing for capital with large countries not only decreases the large-country tax rates on capital, but also results in more right-wing governments being elected. Small countries thus have ”right-wing power”.
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Bibliographic InfoPaper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 153.
Length: 31 pages
Date of creation: Dec 2012
Date of revision:
Publication status: Published in Working papers 153, European Bank for Reconstruction and Development
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tax competition; government; elections;
Find related papers by JEL classification:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- F5 - International Economics - - International Relations, National Security, and International Political Economy
This paper has been announced in the following NEP Reports:
- NEP-ACC-2013-01-26 (Accounting & Auditing)
- NEP-ALL-2013-01-26 (All new papers)
- NEP-OPM-2013-01-26 (Open Economy Macroeconomic)
- NEP-PBE-2013-01-26 (Public Economics)
- NEP-POL-2013-01-26 (Positive Political Economics)
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