Globalization, Tax Competition, and the Welfare State

State Capacity, Capital Mobility, and Tax Competition

Abstract The theory of international tax competition suggests that governments attempt to attract mobile capital bases by undercutting the foreign capital tax rate. An analysis of the role that state capacity plays in tax policymaking under international pressures is, however, missing. The central contribution of our study is to highlight the importance of the interaction between state capaci...

Migration into the Welfare State: Tax and Migration Competition 1

I. Introduction Restrictions on the international mobility of labor are arguably the single largest policy distortion that besets the international economy. A variety of studies suggest that even a small reduction in barriers to migration will result in large welfare benefits to the global economy. In this lecture I focus on a central tension faced by policy makers in countries that receive mig...

Globalization and the Welfare State

Capital Taxation, Globalization, and International Tax Competition

The historical evolution of the corporate tax burden in the OECD nations is studied, beginning with an assessment of alternative measures of the burden. Descriptive analysis of these time series reveals no evidence of a competitive “race to the bottom” in capital taxation, and little evidence of even a harmonization of the tax burden. These conclusions for the OECD and Europe as a whole are con...

Does Tax Competition Raise Voter Welfare?∗

Economists who believe that government is essentially benevolent tend to regard inter-governmental competition as a source of negative externalities that lower welfare. In contrast the public choice perspective, particularly that motivated by the Leviathan model, sees such competition as potentially beneficial. This paper considers a world consisting of politicians of both kinds – self-interest...