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Partial Tax Harmonization Through Infrastructure Coordination

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  • Patricia Sanz‐Córdoba
  • Bernd Theilen

Abstract

In this article, we analyze the role of infrastructure coordination in facilitating partial tax harmonization within a coalition of asymmetric jurisdictions. Two main results are obtained. First, productivity asymmetries represent a serious handicap for partial tax harmonization that can be remedied by coordinating nontax instruments when they allow to reduce these asymmetries. Second, infrastructure coordination through the choice of a common investment level is particularly indicated when asymmetries between potential members of a tax coalition are large. The current usage of European Union (EU) structural funds orientated to reduce regional infrastructure deficits is therefore suitable to facilitate tax harmonization within the EU. (JEL H87, H54, H21)

Suggested Citation

  • Patricia Sanz‐Córdoba & Bernd Theilen, 2018. "Partial Tax Harmonization Through Infrastructure Coordination," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1399-1416, April.
  • Handle: RePEc:bla:ecinqu:v:56:y:2018:i:2:p:1399-1416
    DOI: 10.1111/ecin.12554
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    File URL: https://doi.org/10.1111/ecin.12554
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    Cited by:

    1. Sanz-Córdoba, Patricia, 2020. "The role of infrastructure investment and factor productivity in international tax competition," Economic Modelling, Elsevier, vol. 85(C), pages 30-38.

    More about this item

    JEL classification:

    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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