IDEAS home Printed from https://ideas.repec.org/p/fip/fedmsr/348.html
   My bibliography  Save this paper

Comment on Mendoza and Tesar's \\"Why hasn't tax competition triggered a race to the bottom? Some quantitative lessons from the EU\\"

Author

Listed:
  • Ellen R. McGrattan

Abstract

With a monetary union in place, many European countries are now debating if and how to coordinate their tax policies. Of particular interest to EU ministers is taxation of mobile factors like capital. Mendoza and Tesar (MT) use a game-theoretic approach to address the question, What is the outcome of tax competition and tax coordination when countries choose the tax on capital income and adjust other tax rates to keep revenues constant? MT predict very large welfare gains (losses) to tax competition for European countries that had high (low) tax rates prior to financial integration. In particular they predict a large gain for the United Kingdom and a large loss for countries in continental Europe. A second finding is that the welfare gains of tax coordination relative to that of tax competition are small. I discuss these findings in light of current policy debates and possible future extensions of this work.

Suggested Citation

  • Ellen R. McGrattan, 2004. "Comment on Mendoza and Tesar's \\"Why hasn't tax competition triggered a race to the bottom? Some quantitative lessons from the EU\\"," Staff Report 348, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmsr:348
    as

    Download full text from publisher

    File URL: http://minneapolisfed.org/research/common/pub_detail.cfm?pb_autonum_id=916
    Download Restriction: no

    File URL: http://minneapolisfed.org/research/sr/sr348.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Taxation;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedmsr:348. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jannelle Ruswick (email available below). General contact details of provider: https://edirc.repec.org/data/cfrbmus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.