Globalization, Tax Competition and Fiscal Equalization

Carl Gaigné, Stéphane Riou

Research output: Working paperDiscussion paper

Abstract

Recent empirical evidences suggest that the economic globalization has likely favored the emergence of harmful tax competition among major industrialized countries. This paper analyzes the ability of Öscal equalization to weaken the international tax competition when the economies are not perfectly integrated and the private sector is imperfectly competitive. We consider two types of transfer programs: tax base and tax revenue equalization. The framework developed yields results which agree with empirical evidences and exhibits two types of inefficiencies due to noncooperative behavior: the tax rates are too low in both regions and the difference in tax rates can be too high. Both externalities imply that the provision of public good is too low from an efficiency viewpoint. We show that Öscal equalization may imply more efficient tax policies and tax base allocation between regions, promoting a rise in corporate tax revenues.
LanguageEnglish
Place of PublicationGlasgow
PublisherUniversity of Strathclyde
Pages1-32
Number of pages33
Volume04
Publication statusPublished - 2004

Fingerprint

Tax competition
Fiscal equalization
Globalization
Equalization
Tax rate
Empirical evidence
Tax revenues
Tax base
Developed countries
Externalities
Inefficiency
Corporate tax
Private sector
Economic globalization
Tax policy
Integrated
International tax competition

Keywords

  • profit tax competition
  • economic integration
  • monopolistic competition
  • fiscal equalization

Cite this

Gaigné, C., & Riou, S. (2004). Globalization, Tax Competition and Fiscal Equalization. (18 ed.) (pp. 1-32). Glasgow: University of Strathclyde.
Gaigné, Carl ; Riou, Stéphane. / Globalization, Tax Competition and Fiscal Equalization. 18. ed. Glasgow : University of Strathclyde, 2004. pp. 1-32
@techreport{89ab2a7d0d9a47e5b85e2e3004021e0b,
title = "Globalization, Tax Competition and Fiscal Equalization",
abstract = "Recent empirical evidences suggest that the economic globalization has likely favored the emergence of harmful tax competition among major industrialized countries. This paper analyzes the ability of {\"O}scal equalization to weaken the international tax competition when the economies are not perfectly integrated and the private sector is imperfectly competitive. We consider two types of transfer programs: tax base and tax revenue equalization. The framework developed yields results which agree with empirical evidences and exhibits two types of inefficiencies due to noncooperative behavior: the tax rates are too low in both regions and the difference in tax rates can be too high. Both externalities imply that the provision of public good is too low from an efficiency viewpoint. We show that {\"O}scal equalization may imply more efficient tax policies and tax base allocation between regions, promoting a rise in corporate tax revenues.",
keywords = "profit tax competition, economic integration, monopolistic competition, fiscal equalization",
author = "Carl Gaign{\'e} and St{\'e}phane Riou",
note = "Discussion paper.",
year = "2004",
language = "English",
volume = "04",
pages = "1--32",
publisher = "University of Strathclyde",
edition = "18",
type = "WorkingPaper",
institution = "University of Strathclyde",

}

Gaigné, C & Riou, S 2004 'Globalization, Tax Competition and Fiscal Equalization' 18 edn, University of Strathclyde, Glasgow, pp. 1-32.

Globalization, Tax Competition and Fiscal Equalization. / Gaigné, Carl; Riou, Stéphane.

18. ed. Glasgow : University of Strathclyde, 2004. p. 1-32.

Research output: Working paperDiscussion paper

TY - UNPB

T1 - Globalization, Tax Competition and Fiscal Equalization

AU - Gaigné, Carl

AU - Riou, Stéphane

N1 - Discussion paper.

PY - 2004

Y1 - 2004

N2 - Recent empirical evidences suggest that the economic globalization has likely favored the emergence of harmful tax competition among major industrialized countries. This paper analyzes the ability of Öscal equalization to weaken the international tax competition when the economies are not perfectly integrated and the private sector is imperfectly competitive. We consider two types of transfer programs: tax base and tax revenue equalization. The framework developed yields results which agree with empirical evidences and exhibits two types of inefficiencies due to noncooperative behavior: the tax rates are too low in both regions and the difference in tax rates can be too high. Both externalities imply that the provision of public good is too low from an efficiency viewpoint. We show that Öscal equalization may imply more efficient tax policies and tax base allocation between regions, promoting a rise in corporate tax revenues.

AB - Recent empirical evidences suggest that the economic globalization has likely favored the emergence of harmful tax competition among major industrialized countries. This paper analyzes the ability of Öscal equalization to weaken the international tax competition when the economies are not perfectly integrated and the private sector is imperfectly competitive. We consider two types of transfer programs: tax base and tax revenue equalization. The framework developed yields results which agree with empirical evidences and exhibits two types of inefficiencies due to noncooperative behavior: the tax rates are too low in both regions and the difference in tax rates can be too high. Both externalities imply that the provision of public good is too low from an efficiency viewpoint. We show that Öscal equalization may imply more efficient tax policies and tax base allocation between regions, promoting a rise in corporate tax revenues.

KW - profit tax competition

KW - economic integration

KW - monopolistic competition

KW - fiscal equalization

M3 - Discussion paper

VL - 04

SP - 1

EP - 32

BT - Globalization, Tax Competition and Fiscal Equalization

PB - University of Strathclyde

CY - Glasgow

ER -

Gaigné C, Riou S. Globalization, Tax Competition and Fiscal Equalization. 18 ed. Glasgow: University of Strathclyde. 2004, p. 1-32.