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Partial vs. Global Coordination of Capital Income Tax Policies

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  • Bo Sandemann Rasmussen

    () (Department of Economics, University of Aarhus, Denmark)

Abstract

Coordination of tax policies among policy makers is an often considered remedy against inefficiently low taxes on mobile tax bases induced by tax competition. Tax coordination may, however, not be particularly successful if some countries do not take part in the coordination. The outcome of such "partial coordination" in capital income taxation is derived within a linear-quadratic tax competition model with imperfect capital mobility, and the results suggest that the critical mass of countries needed for partial coordination to matter significantly is likely to be a very large percentage of the economies of the world, with the main benefits accruing to countries not participating. This may call for implementation of a global capital income tax treaty administered along the lines of the WTO trade agreements.

Suggested Citation

  • Bo Sandemann Rasmussen, "undated". "Partial vs. Global Coordination of Capital Income Tax Policies," Economics Working Papers 2001-3, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2001-3
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    File URL: ftp://ftp.econ.au.dk/afn/wp/01/wp01_3.pdf
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    References listed on IDEAS

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    1. Gordon, Roger H, 1992. " Can Capital Income Taxes Survive in Open Economies?," Journal of Finance, American Finance Association, vol. 47(3), pages 1159-1180, July.
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    10. PERALTA, Susana & van YPERSELE, Tanguy, 2002. "Capital tax competition among an arbitrary number of asymmetric countries," CORE Discussion Papers 2002031, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Itaya, Jun-ichi & Okamura, Makoto & Yamaguchi, Chikara, 2014. "Partial tax coordination in a repeated game setting," European Journal of Political Economy, Elsevier, vol. 34(C), pages 263-278.
    2. Jun-ichi Itaya & Makoto Okamura & Chikara Yamaguchi, 2011. "On the Sustainability of Partial Tax Harmonization among Asymmetric Countries," ANU Working Papers in Economics and Econometrics 2011-540, Australian National University, College of Business and Economics, School of Economics.

    More about this item

    Keywords

    Capital income taxation; tax competition; tax coordination; partial coordination.;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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