Canada-U.S. Free Trade And Pressures For Tax Harmonization
AbstractTo what degree will the recent free-trade agreement create pressure on the U.S. and Canada to modify, and perhaps harmonize, their tax systems? What will be the implications of the more extensive policy changes now going on within the E.C.? This paper examines the types of pressures for reform created by recent agreements, focussing in turn on the pressures created by capital mobility, elimination to tariff and nontariff barriers, and mobility of individuals. As shown in the local public finance literature, unrestricted individuals and firms pay tax in accordance with the costs they impose on the community. More limited mobility should have more limited effects. Since existing national tax structures differ dramatically from those that have evolved to finance local governments, however, even limited mobility can force substantial changes in each country's fiscal structure. In addition to characterizing the equilibrium tax structure that should result, given increased mobility, the paper also explores the circumstances in which there can be mutual gains from moving away from the equilibrium tax structure.
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Bibliographic InfoPaper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 260.
Length: 27 pages
Date of creation: 1990
Date of revision:
free trade ; fiscal policy ; trade agreements;
Other versions of this item:
- Roger H. Gordon, 1990. "Canada - U.S. Free Trade and Pressures for Tax Harmonization," NBER Working Papers 3327, National Bureau of Economic Research, Inc.
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.:
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