Wolfgang Eggert (Center of Finance and Econometrics)
Abstract
This paper anlyzes the impact of tax competition between two countries of un- equal per-capita capital endownments on tax rates and efficiency when distorting wage, residence-based and source-based capital taxes (or any combination of two instruments) are available for governments. The national welfare costs and benefits of tax rate variations are shown to be ambiguous in the asymmetric Nash equilibrium due to the existence of tax base and terms of trade effects. Moreover, numerical simulation results indicate that non-cooperative equilibria in Nash strategies are inefficient from an international perspective, even if residence-based capital taxes are in the set of tax instruments available to fiscal authorities.
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Paper provided by EconWPA in its series Finance with number
9904001.
Length: 25 pages Date of creation: 14 Apr 1999 Date of revision: Handle: RePEc:wpa:wuwpfi:9904001
Note: 25 pages Contact details of provider: Web page: http://129.3.20.41
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Find related papers by JEL classification: H2 - Public Economics - - Taxation, Subsidies, and Revenue H4 - Public Economics - - Publicly Provided Goods H7 - Public Economics - - State and Local Government; Intergovernmental Relations
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