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Can Partial Fiscal Coordination Be Welfare Worsening? A model of tax competition

Author

Listed:
  • Maurice Marchand
  • Pierre Pestieau
  • Motohiro Sato

Abstract

Most work on tax competition argues that mobile factors tend to be undertaxed except if there is coordination of tax policies. Full coordination is not however always feasible, and as a consequence some measures of partial coordination have been proposed such as minimal witholding taxes on interest income. We show that partial coordination can be in some instances welfare worsening and that then no coordination is to be preferred.

Suggested Citation

  • Maurice Marchand & Pierre Pestieau & Motohiro Sato, 2002. "Can Partial Fiscal Coordination Be Welfare Worsening? A model of tax competition," CREPP Working Papers 0205, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
    • Handle: RePEc:rpp:wpaper:0205
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    File URL: http://www2.ulg.ac.be/crepp/papers/crepp-wp200205.pdf
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    2. Frode Brevik & Manfred Gärtner, 2006. "Macroeconomic effects of banking secrecy when tax evasion is endogenous," University of St. Gallen Department of Economics working paper series 2006 2006-10, Department of Economics, University of St. Gallen.
    3. Frode Brevik & Manfred Gärtner, 2008. "Can tax evasion tame Leviathan governments?," Public Choice, Springer, vol. 136(1), pages 103-122, July.
    4. Apergis, Nicholas & Cooray, Arusha, 2014. "Tax revenues convergence across ASEAN, Pacific and Oceania countries: Evidence from club convergence," Journal of Multinational Financial Management, Elsevier, vol. 27(C), pages 11-21.
    5. Wang, Wenming & Kawachi, Keisuke & Ogawa, Hikaru, 2017. "Does equalization transfer enhance partial tax cooperation?," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 431-443.
    6. Ogawa, Hikaru, 2021. "Partial environmental tax coordination and political delegation," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    7. Yutao Han & Xi Wan, 2019. "Who benefits from partial tax coordination?," The World Economy, Wiley Blackwell, vol. 42(5), pages 1620-1640, May.
    8. Huizinga, Harry & Nielsen, Søren Bo, 2005. "Capital Income Tax Coordination and the Income Tax Mix," Working Papers 24-2005, Copenhagen Business School, Department of Economics.
    9. Kai Konrad, 2008. "Mobile tax base as a global common," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(4), pages 395-414, August.
    10. 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.
    11. Thomas Eichner & Rüdiger Pethig, 2018. "Self-enforcing capital tax coordination," Journal of Business Economics, Springer, vol. 88(7), pages 915-940, September.
    12. Yutao Han, 2013. "Who benefits from partial tax coordination?," DEM Discussion Paper Series 13-24, Department of Economics at the University of Luxembourg.
    13. Marta Lukáčová & Jaroslav Korečko & Sylvia Jenčová & Mária Jusková, 2020. "Analysis of selected indicators of tax competition and tax harmonization in the EU," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(1), pages 123-137, September.
    14. Robin Boadway & Katherine Cuff, 2017. "The impressive contribution of Canadian economists to fiscal federalism theory and policy," Canadian Journal of Economics, Canadian Economics Association, vol. 50(5), pages 1348-1380, December.
    15. Frode Brevik & Manfred Gärtner, 2005. "Welfare and Distribution Effects of Bank Secrecy Laws," University of St. Gallen Department of Economics working paper series 2005 2005-07, Department of Economics, University of St. Gallen.
    16. Kaisa Kotakorpi, 2009. "Paternalism and Tax Competition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(1), pages 125-149, March.
    17. Sven Wehke, 2007. "Fighting Tax Competition in the Presence of Unemployment: Complete versus Partial Tax Coordination," FEMM Working Papers 07010, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    18. 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.

    More about this item

    Keywords

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    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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