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Tax Incidence, Majority Voting And Capital Market Integration

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  • Lockwood, Ben

    (Department of Economics and CSGR)

  • Makris, Miltiadis

    (Department of Economics, University of Exeter, CMPO, University of Bristol and IMOP, Athens University of Economics and Business)

Abstract

We re-examine, from a political economy perspective, the standard view that higher capital mobility results in lower capital taxes - a view, in fact, that is not confirmed by the available empirical evidence. We show that when a small economy is opened to capital mobility, the change of incidence of a tax on capital - from capital owners to owners of the immobile factor - may interact in such a way with political decision-making so as to cause a rise in the equilibrium tax. This can happen whether or not the fixed factor (labour) can be taxed.

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Bibliographic Info

Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 712.

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Length: 27 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:wrk:warwec:712

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References

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  1. Wooders, Myrna & Zissimos, Ben & Dhillon, Amrita, 2001. "Tax Competition Reconsidered," The Warwick Economics Research Paper Series (TWERPS) 622, University of Warwick, Department of Economics.
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  3. Tim Besley & Stephen Coate, . ""An Economic Model of Representative Democracy''," CARESS Working Papres 95-02, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  4. Dani Rodrik, 1997. "Has Globalization Gone Too Far?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 57.
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  17. DePeter James A. & Myers Gordon M., 1994. "Strategic Capital Tax Competition: A Pecuniary Externality and a Corrective Device," Journal of Urban Economics, Elsevier, vol. 36(1), pages 66-78, July.
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Cited by:
  1. Rüdiger Pethig & Frieder Kolleß, 2009. "Asymmetric capital-tax competition, unemployment and losses from capital market integration," Volkswirtschaftliche Diskussionsbeiträge 137-09, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
  2. Yu-Bong Lai, 2014. "Asymmetric tax competition in the presence of lobbying," International Tax and Public Finance, Springer, vol. 21(1), pages 66-86, February.
  3. Angelopoulos, Konstantinos & Economides, George & Kammas, Pantelis, 2009. "Do political incentives matter for tax policies? Ideology, opportunism and the tax structure," SIRE Discussion Papers 2009-09, Scottish Institute for Research in Economics (SIRE).
  4. Chu, Hsun, 2013. "Tax Enforcement Policy and the Provision of Public Goods with the Presence of Tax Havens," MPRA Paper 53021, University Library of Munich, Germany, revised Nov 2013.
  5. Ben Zissimos & Myrna Wooders, 2003. "Public Good Differentiation and the Intensity of Tax Competition," Vanderbilt University Department of Economics Working Papers 0710, Vanderbilt University Department of Economics.
  6. Manmohan S. Kumar & Dennis P. Quinn, 2012. "Globalization and Corporate Taxation," IMF Working Papers 12/252, International Monetary Fund.
  7. Lai, Yu-Bong, 2010. "The political economy of capital market integration and tax competition," European Journal of Political Economy, Elsevier, vol. 26(4), pages 475-487, December.
  8. Angelopoulos, Konstantinos & Economides, George & Kammas, Pantelis, 2012. "Does cabinet ideology matter for the structure of tax policies?," European Journal of Political Economy, Elsevier, vol. 28(4), pages 620-635.

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