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Fighting Multiple Tax Havens

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  • Elsayyad, May
  • Konrad, Kai A.

Abstract

This paper develops a competition theory framework that evaluates an important aspect of the OECD’s Harmful Tax Practices Initiative against tax havens. We show that the sequential nature of the process is harmful and more costly than a “big bang” multilateral agreement. The sequentiality may even prevent the process from being completed successfully. Closing down a subset of tax havens reduces competition among the havens that remain active. This makes their “tax haven business” more profitable and shifts a larger share of rents to these remaining tax havens, making them more reluctant to give up their “tax haven business”. Moreover, the outcome of this process, reducing the number of tax havens, but not eliminating them altogether, may reduce welfare in the OECD.

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  • Elsayyad, May & Konrad, Kai A., 2012. "Fighting Multiple Tax Havens," Munich Reprints in Economics 13964, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenar:13964
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    Cited by:

    1. Patrice Pieretti & Giuseppe Pulina & Skerdilajda Zanaj, 2020. "Tax havens compliance with international standards: A temporal perspective," Review of International Economics, Wiley Blackwell, vol. 28(1), pages 279-301, February.
    2. Alfons J. Weichenrieder & Fangying Xu, 2019. "Are tax havens good? Implications of the crackdown on secrecy," Journal of Economics, Springer, vol. 127(2), pages 147-160, July.
    3. Konrad, Kai A. & Stolper, Tim B.M., 2016. "Coordination and the fight against tax havens," Journal of International Economics, Elsevier, vol. 103(C), pages 96-107.
    4. Anesa, Mattia & Gillespie, Nicole & Spee, A. Paul & Sadiq, Kerrie, 2019. "The legitimation of corporate tax minimization," Accounting, Organizations and Society, Elsevier, vol. 75(C), pages 17-39.
    5. Bastani, Spencer & Waldenström, Daniel, 2018. "How Should Capital Be Taxed? Theory and Evidence from Sweden," IZA Discussion Papers 11475, Institute of Labor Economics (IZA).
    6. Katarzyna Bilicka & Clemens Fuest, 2014. "With which countries do tax havens share information?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(2), pages 175-197, April.
    7. Langenmayr, Dominika & Haufler, Andreas & Bauer, Christian J., 2015. "Should tax policy favor high- or low-productivity firms?," European Economic Review, Elsevier, vol. 73(C), pages 18-34.
    8. Niels Johannesen & Gabriel Zucman, 2014. "The End of Bank Secrecy? An Evaluation of the G20 Tax Haven Crackdown," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 65-91, February.
    9. May Elsayyad, 2012. "Bargaining over Tax Information Exchange," Working Papers bargaining_over_tax_infor, Max Planck Institute for Tax Law and Public Finance.
    10. Panagiotis Delimatsis & Bernard Hoekman, 2017. "National Tax Regulation, International Standards and the GATS: Argentina—Financial Services," RSCAS Working Papers 2017/42, European University Institute.
    11. Alejandro Esteller-Moré & Shafik Hebous & Niels Johannesen & Katarzyna Anna Bilicka, 2018. "The Present and Future of Tax Havens / El presente y futuro de los paraísos fiscales / El present i futur dels paradisos fiscals," IEB Reports ieb_report_4_2018, Institut d'Economia de Barcelona (IEB).
    12. Hsun Chu & Ching-Chong Lai & Chu-Chuan Cheng, 2015. "Tax Havens, Growth, and Welfare," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(6), pages 802-823, December.
    13. Gabriel Zucman, 2015. "Grenzüberschreitende Besteuerung: Wie Privatvermögen und Unternehmensgewinne erfasst werden können," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 41(1), pages 13-48.
    14. Arnaud Bourgain & Patrice Pieretti & Skerdilajda Zanaj, 2012. "From tax evasion to tax planning," CREA Discussion Paper Series 12-16, Center for Research in Economic Analysis, University of Luxembourg.
    15. Leonce Ndikumana, 2014. "International Tax Cooperation and Implications of Globalization," CDP Background Papers 024, United Nations, Department of Economics and Social Affairs.
    16. Tim B.M. Stolper, 2017. "A Step Change in Tax Transparency? An Event Study on How the Automatic Exchange of Information Did Not Affect Swiss Banks," Working Papers tax-mpg-rps-2017-10, Max Planck Institute for Tax Law and Public Finance.
    17. Michael Keen & Kai A. Konrad, 2012. "International Tax Competition and Coordination," Working Papers international_tax_competi, Max Planck Institute for Tax Law and Public Finance.
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    21. Marcelo Arbex & Sidney Caetano, 2016. "Welfare Implications of AEoI," Working Papers 1608, University of Windsor, Department of Economics.

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    Keywords

    tax haven; harmful tax practices; bidding for haven inactivation;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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