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Fighting Multiple Tax Havens

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  • May Elsayyad
  • Kai A. Konrad

Abstract

This paper develops a competition theory framework that evaluates an important aspect of the OECD's Harmful Tax Practices Initiative against tax havens. We show that the sequential nature of the process is harmful and more costly than a "big bang" multilateral agreement. The sequentiality may even prevent the process from being completed successfully. Closing down a subset of tax havens reduces competition among the havens that remain active. This makes their "tax haven business" more profitable and shifts a larger share of rents to these remaining tax havens, making them more reluctant to give up their "tax haven business". Moreover, the outcome of this process, reducing the number of tax havens, but not eliminating them altogether, may reduce welfare in the OECD.

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Paper provided by Max Planck Institute for Tax Law and Public Finance in its series Working Papers with number fighting_multiple_tax_havens.

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Length: 30 pages
Date of creation: Jan 2011
Date of revision:
Handle: RePEc:mpi:wpaper:fighting_multiple_tax_havens

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Keywords: tax haven; harmful tax practices; bidding for haven inactivation;

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Cited by:
  1. Katarzyna Bilicka & Clemens Fuest, 2014. "With which countries do tax havens share information?," International Tax and Public Finance, Springer, vol. 21(2), pages 175-197, April.
  2. Langenmayr, Dominika & Haufler, Andreas & Bauer, Christian J., 2012. "Should tax policy favor high- or low-productivity firms?," Discussion Papers in Economics 14277, University of Munich, Department of Economics.
  3. repec:hal:wpaper:halshs-00665054 is not listed on IDEAS
  4. Niels Johannesen & Gabriel Zucman, 2012. "The End of Bank Secrecy? An Evaluation of the G20 Tax Haven Crackdown," PSE Working Papers halshs-00665054, HAL.
  5. Arnaud Bourgain & Patrice Pieretti & Skerdilajda Zanaj, 2012. "From tax evasion to tax planning," CREA Discussion Paper Series 12-16, Center for Research in Economic Analysis, University of Luxembourg.
  6. Chu, Hsun & Lai, Ching-Chong & Cheng, Chu-Chuan, 2013. "Tax Havens, Growth, and Welfare," MPRA Paper 52878, University Library of Munich, Germany, revised Sep 2013.
  7. May Elsayyad, 2012. "Bargaining over Tax Information Exchange," Working Papers bargaining_over_tax_infor, Max Planck Institute for Tax Law and Public Finance.
  8. Michael Keen & Kai A. Konrad, 2012. "International Tax Competition and Coordination," Working Papers international_tax_competi, Max Planck Institute for Tax Law and Public Finance.

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