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Is tax harmonization useful?

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  • Eggert, Wolfgang
  • Genser, Bernd

Abstract

It is a widely acknowledged result of the literature on capital tax competition that underprovision of public goods can only be avoided if tax coordination between governments is intensive and residence-based capital taxation can be enforced. In this paper we use a model where commodity and factor taxes are available and we show that governments competing for tax bases will choose a globally efficient tax structure. In contrast to previous conclusions, we also show that the availability of a destination-based commodity tax or a labor tax is necessary to mitigate the problem of inefficient Nash equilibria and thus reduces the necessity of supranational tax harmonization or coordination.

Suggested Citation

  • Eggert, Wolfgang & Genser, Bernd, 2000. "Is tax harmonization useful?," CoFE Discussion Papers 00/23, University of Konstanz, Center of Finance and Econometrics (CoFE).
    • Handle: RePEc:zbw:cofedp:0023
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    Cited by:

    1. Brito Gaona, Luis Felipe & Iglesias, Emma M., 2018. "Inversión privada, gasto publico e impuestos en la Unión Europea," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 26(1), pages 3-24, Diciembre.
    2. Becker, Johannes & Wilson, John D., 2023. "Tax competition with two tax instruments — and tax base erosion," Journal of Public Economics, Elsevier, vol. 225(C).
    3. Clemens Fuest & Bernd Huber & Jack Mintz, 2003. "Capital Mobility and Tax Competition: A Survey," CESifo Working Paper Series 956, CESifo.
    4. Kozuharov, Sasho & Ristovska, Natasha & Ilieva, Jana, 2015. "Harmonization Of Tax Policies:Reviewing Macedonia And Croatia," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 6(2), pages 255-265.
    5. Zou, Yuxiang & Chen, Tai-Liang, 2016. "International joint venture and welfare-improving tariff-tax reforms," International Review of Economics & Finance, Elsevier, vol. 46(C), pages 27-35.
    6. Johannes Becker & John D. Wilson, 2021. "Tax Competition with Two Tax Instruments - and Tax Evasion," CESifo Working Paper Series 9318, CESifo.

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