Tax reform, delocation and heterogeneous firms: Base widening and rate lowering rule

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Tax reform, delocation and heterogeneous firms: Base widening and rate lowering rule

Author Info

Richard E. Baldwin (Graduate Institute, Geneva and CEPR)
Toshihiro Okubo (Research Institute for Economics and Business Administration, Kobe University)

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Abstract

We model international tax competition allowing for agglomeration forces and heterogeneous firms. This provides a new perspective since a tax schedules have different effects on the international relocation decision of small and large firms (large firms are endogenously more sensitive to tax competition) and these decisions affect industry productivity in addition to the usual effects. The model allows us to study rate-lowering base-widening reforms. We show it is generally possible to design such a reforms that raises revenue without losing firms.

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Publisher Info
Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number 222.

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Length: 17 pages
Date of creation: Oct 2005
Date of revision: May 2008
Handle: RePEc:kob:dpaper:222

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Find related papers by JEL classification:
H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-10-13 (All new papers)
NEP-PBE-2008-10-13 (Public Economics)

References listed on IDEAS
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Other versions:
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