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Non-binding minimum taxes may foster tax competition

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  • Konrad, Kai A.

Abstract

In a Stackelberg framework of capital income taxation it is shown that imposing a minimum tax rate that is lower than all countries' equilibrium tax rates in the non-cooperative equilibrium may reduce equilibrium tax rates in all countries. -- Diese Arbeit untersucht Steuerwettbewerb als Stackelberg-Spiel. Als zentrales Ergebnis zeigt sich, dass die Einführung einer unteren Grenze für die Höhe der von Ländern wählbaren Steuersätzen zu einer Senkung der Steuersätze im Gleichgewicht führen kann. Die politisch häufig geforderte Einführung von Mindeststeuersätzen im Bereich der internationalen Kapitalbesteuerung kann also im Vergleich zur angestrebten Wirkung genau die gegenteiligen Effekte haben.

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Bibliographic Info

Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Processes and Governance with number SP II 2008-10.

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Date of creation: 2008
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Handle: RePEc:zbw:wzbmpg:spii200810

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Related research

Keywords: Corporate income; capital income; taxation; tax competition; minimum tax; tax coordination; Stackelberg;

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References

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  1. Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, Elsevier, vol. 2(1), pages 29-46, March.
  2. Clemens Fuest & Bernd Huber & Jack Mintz, 2003. "Capital Mobility and Tax Competition: A Survey," CESifo Working Paper Series 956, CESifo Group Munich.
  3. PERALTA, Susana & van YPERSELE, Tanguy, 2002. "Coordination of capital taxation among Asymmetric countries," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2002032, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Fuest, Clemens & Huber, Bernd & Mintz, Jack, 2005. "Capital mobility and tax competition," Munich Reprints in Economics, University of Munich, Department of Economics 20329, University of Munich, Department of Economics.
  5. Kanbur, Ravi & Keen, Michael, 1993. "Jeux Sans Frontieres: Tax Competition and Tax Coordination When Countries Differ in Size," American Economic Review, American Economic Association, American Economic Association, vol. 83(4), pages 877-92, September.
  6. Morten Hvidt & Søren Bo Nielsen, 2001. "Non-cooperative vs. Minimum-Rate Commodity Taxation," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 2(4), pages 315-326, November.
  7. Rosanne Altshuler & Timothy J. Goodspeed, 2002. "Follow the Leader? Evidence on European and U.S. Tax Competition," Departmental Working Papers, Rutgers University, Department of Economics 200226, Rutgers University, Department of Economics.
  8. You-Qiang Wang, 1999. "Commodity Taxes under Fiscal Competition: Stackelberg Equilibrium and Optimality," American Economic Review, American Economic Association, American Economic Association, vol. 89(4), pages 974-981, September.
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Citations

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Cited by:
  1. Hikaru Ogawa, 2013. "Further analysis on leadership in tax competition: the role of capital ownership," International Tax and Public Finance, Springer, Springer, vol. 20(3), pages 474-484, June.
  2. Johannes Becker & Clemens Fuest, 2009. "Transfer Pricing Policy and the Intensity of Tax Rate Competition," Working Papers, Oxford University Centre for Business Taxation 0930, Oxford University Centre for Business Taxation.
  3. Aron Kiss, 2011. "Minimum Taxes and Repeated Tax Competition," IEHAS Discussion Papers, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences 1116, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  4. Baskaran, Thushyanthan & Lopes da Fonseca, Mariana, 2013. "The economics and empirics of tax competition: A survey," Center for European, Governance and Economic Development Research Discussion Papers 163, University of Goettingen, Department of Economics.
  5. Yutao Han & Patrice Pieretti & Benteng Zou, 2013. "On the desirability of tax coordination when countries compete in taxes and infrastructure," Working Papers, Bielefeld University, Center for Mathematical Economics 476, Bielefeld University, Center for Mathematical Economics.
  6. Andreas Haufler & Christoph Lülfesmann, 2013. "Reforming an Asymmetric Union: On the Virtues of Dual Tier Capital Taxation," CESifo Working Paper Series 4076, CESifo Group Munich.

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