Taxation if Capital is not Perfectly Mobile: Tax Competition versus Tax Exportation
AbstractThis paper analyzes the tax competition and tax exporting effect of financial integration. On the one hand, financial integration increases capital mobility and thus the incentive for countries to compete for capital. On the other hand, financial integration increases foreign ownership of firms and capital and allows for exportation of source taxes. Both effects have contrary implications for capital taxes. Allowing for imperfectly mobile capital, our analysis suggests that currently the tax exportation effect is dominating, which implies excessive capital taxation. From studying the benchmark of full financial integration we find that capital taxes are likely to increase from current levels. We further examine the tax exportation effect empirically and find that is significant as well as quantitatively important for the U.S.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 02-07.
Date of creation:
Date of revision:
Contact details of provider:
Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark
Phone: (+45) 3532 4411
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk/epru/
More information through EDIRC
Other versions of this item:
- Eijffinger, S.C.W. & Wagner, W.B., 2001. "Taxation if Capital is Not Perfectly Mobile: Tax Competition versus Tax Exportation," Open Access publications from Tilburg University urn:nbn:nl:ui:12-88263, Tilburg University.
- Eijffinger, Sylvester C W & Wagner, Wolf, 2001. "Taxation if Capital is Not Perfectly Mobile: Tax Competition versus Tax Exportation," CEPR Discussion Papers 3084, C.E.P.R. Discussion Papers.
- F20 - International Economics - - International Factor Movements and International Business - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-05-08 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Huizinga, H.P. & Nielsen, S.B., 1995.
"Capital income and profits taxation with foreign ownership of firms,"
1995-82, Tilburg University, Center for Economic Research.
- Huizinga, Harry & Nielsen, Soren Bo, 1997. "Capital income and profit taxation with foreign ownership of firms," Journal of International Economics, Elsevier, vol. 42(1-2), pages 149-165, February.
- Huizinga, H.P. & Nielsen, S.B., 1997. "Capital income and profit taxation with foreign ownership of firms," Open Access publications from Tilburg University urn:nbn:nl:ui:12-73857, Tilburg University.
- Harry Huizinga & Soeren Bo Nielsen, . "Capital Income and Profits Taxation with Foreign Ownerwhip of Firms," EPRU Working Paper Series 95-09, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Huizinga, H. & Nielsen, S.B., 1995. "Capital Income and Profits Taxation with Foreign Ownership of Firms," Papers 9582, Tilburg - Center for Economic Research.
- Eckhard Janeba, 2000. "Tax Competition When Governments Lack Commitment: Excess Capacity as a Countervailing Threat," American Economic Review, American Economic Association, vol. 90(5), pages 1508-1519, December.
- Peter Birch Sørensen, 2001. "International Tax Coordination: Regionalism Versus Globalism," CESifo Working Paper Series 483, CESifo Group Munich.
- Razin, Assaf & Sadka, Efraim, 1991.
"International tax competition and gains from tax harmonization,"
Elsevier, vol. 37(1), pages 69-76, September.
- Assaf Razin & Efraim Sadka, 1991. "International Tax Competition and Gains from Tax Harmonization," NBER Working Papers 3152, National Bureau of Economic Research, Inc.
- Mihir A. Desai & James R. Hines Jr., 2001.
"Foreign Direct Investment in a World of Multiple Taxes,"
NBER Working Papers
8440, National Bureau of Economic Research, Inc.
- Desai, Mihir A. & Foley, C. Fritz & Hines, James Jr., 2004. "Foreign direct investment in a world of multiple taxes," Journal of Public Economics, Elsevier, vol. 88(12), pages 2727-2744, December.
- Lee, Kangoh, 1997. "Tax Competition with Imperfectly Mobile Capital," Journal of Urban Economics, Elsevier, vol. 42(2), pages 222-242, September.
- Swenson, Deborah L., 1994. "The impact of U.S. tax reform on foreign direct investment in the United States," Journal of Public Economics, Elsevier, vol. 54(2), pages 243-266, June.
- Hines, James R. Jr., 1999. "Lessons from Behavioral Responses to International Taxation," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 305-22, June Cita.
- Harry Huizinga & Gaetan Nicodeme, 2003.
"Foreign Ownership and Corporate Income Taxation: An Empirical Evaluation,"
- Huizinga, Harry & Nicodeme, Gaetan, 2006. "Foreign ownership and corporate income taxation: An empirical evaluation," European Economic Review, Elsevier, vol. 50(5), pages 1223-1244, July.
- Harry Huizinga & GaÃ«tan NicodÃ¨me, 2003. "Foreign ownership and corporate income taxation : an empirical evaluation," European Economy - Economic Papers 185, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Huizinga, Harry & Nicodeme, Gaetan, 2003. "Foreign Ownership and Corporate Income Taxation: An Empirical Evaluation," CEPR Discussion Papers 3952, C.E.P.R. Discussion Papers.
- Wolf Wagner, 2007. "International Risk Sharing and Government Moral Hazard," Open Economies Review, Springer, vol. 18(5), pages 577-598, November.
- Wagner, W.B., 2007. "International risk sharing and government moral hazard," Open Access publications from Tilburg University urn:nbn:nl:ui:12-193952, Tilburg University.
- Leon Bettendorf & Joeri Gorter & Albert van der Horst, 2006. "Who benefits from tax competition in the European Union?," CPB Document 125, CPB Netherlands Bureau for Economic Policy Analysis.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann).
If references are entirely missing, you can add them using this form.