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Taxing Internationally Mobile Individuals - A Case of Countervailing Incentives

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  • Osmundsen, P.

Abstract

With internationally mobile labour and the abolition of national border controls, the individual may not only have private information about his skill level (adverse selection), but also about the length of time he resides and works in the home country (moral hazard) and about his foreign income. To reduce domestic income taxes, the individual has an incentive to understate his domestic utility and to exaggerate the utility he could obtain by spending additional time abroad.

Suggested Citation

  • Osmundsen, P., 1996. "Taxing Internationally Mobile Individuals - A Case of Countervailing Incentives," Papers 8/96, Norwegian School of Economics and Business Administration-.
  • Handle: RePEc:fth:norgee:8/96
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    References listed on IDEAS

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    1. Schjelderup, G, 1997. "Optimal Income Taxation and International Labour Mobility," Bulletin of Economic Research, Wiley Blackwell, vol. 49(4), pages 327-346, October.
    2. Stiglitz, Joseph E., 1987. "Pareto efficient and optimal taxation and the new new welfare economics," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 15, pages 991-1042 Elsevier.
    3. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Oxford University Press, vol. 38(2), pages 175-208.
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    5. Seade, J. K., 1977. "On the shape of optimal tax schedules," Journal of Public Economics, Elsevier, vol. 7(2), pages 203-235, April.
    6. Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-641, June.
    7. Lewis, Tracy R. & Sappington, David E. M., 1989. "Countervailing incentives in agency problems," Journal of Economic Theory, Elsevier, vol. 49(2), pages 294-313, December.
    8. Biglaiser Gary & Mezzetti Claudio, 1993. "Principals Competing for an Agent in the Presence of Adverse Selection and Moral Hazard," Journal of Economic Theory, Elsevier, vol. 61(2), pages 302-330, December.
    9. Hagen, K.P. & Osmundsen, P. & Schjelderup, G., 1995. "Personal Income Taxation and Welfare Appropriation in an Open Economy," Papers 15/95, Norwegian School of Economics and Business Administration-.
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    Citations

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    Cited by:

    1. Bierbrauer, Felix & Brett, Craig & Weymark, John A., 2013. "Strategic nonlinear income tax competition with perfect labor mobility," Games and Economic Behavior, Elsevier, vol. 82(C), pages 292-311.
    2. Alejandro Esteller & Amedeo Piolatto & Matthew D. Rablen, 2016. "Taxing high-income earners: tax avoidance and mobility," IFS Working Papers W16/07, Institute for Fiscal Studies.
    3. Etienne Lehmann & Laurent Simula & Alain Trannoy, 2014. "Tax me if you can! Optimal Nonlinear Income Tax Between Competing Governments," The Quarterly Journal of Economics, Oxford University Press, vol. 129(4), pages 1995-2030.
    4. Alan Krause, 2015. "On Redistributive Taxation under the Threat of High-Skill Emigration," Discussion Papers 15/21, Department of Economics, University of York.
    5. Kenneth Backlund & Tomas Sjögren & Jesper Stage, 2014. "Optimal tax and expenditure policy in the presence of emigration: Are credit restrictions important?," Indian Growth and Development Review, Emerald Group Publishing, vol. 7(2), pages 98-117, November.
    6. repec:spr:sochwe:v:48:y:2017:i:4:d:10.1007_s00355-017-1038-8 is not listed on IDEAS
    7. Massimo Morelli & Huanxing Yang & Lixin Ye, 2012. "Competitive Nonlinear Taxation and Constitutional Choice," American Economic Journal: Microeconomics, American Economic Association, vol. 4(1), pages 142-175, February.
    8. Simula, Laurent & Trannoy, Alain, 2010. "Optimal income tax under the threat of migration by top-income earners," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 163-173, February.
    9. Tomer Blumkin & Efraim Sadka & Yotam Shem-Tov, 2011. "Labor Migration and the Case for Flat Tax," CESifo Working Paper Series 3471, CESifo Group Munich.
    10. Laurent Simula & Alain Trannoy, 2012. "Shall we keep the highly skilled at home? The optimal income tax perspective," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(4), pages 751-782, October.
    11. Alan Krause, 2009. "Education and Taxation Policies in the Presence of Countervailing Incentives," Economica, London School of Economics and Political Science, vol. 76(302), pages 387-399, April.

    More about this item

    Keywords

    TAXES; TAXATION; INFORMATION;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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