Tax Competition With and Without Preferential Treatment of a Highly-Mobile Tax Base

Jan 01, 2004 | by
  • Description

With the ongoing integration of the world economy, it is increasingly possible for taxpayers to shift taxable income across countries. This possibility gives rise to the well known problem of tax competition, whereby governments compete for internationally mobile sources of tax revenue by reducing the rates at which these sources are taxed. The result may be inefficiently low levels of tax revenue. See Wilson (1999) for a review of the tax competition literature. Working Paper Number 04-47.