Dynamic Fiscal Competition with Residence Based Taxation∗
نویسنده
چکیده
Recent international agreements on tax data sharing aim to facilitate residence based taxation of capital and thus mitigate tax competition. I show that residence based capital tax rates can still decline with the number of financially integrated countries when public spending and debt are used strategically. While suboptimal in the steady state, strategic policies persist during transition if the scale of financial integration is low. Compared to coordinated policies, strategically set tax rates are lower while public spending and debt are higher in the short run. In the long run coordination implies lower capital tax rates and higher public spending. JEL Codes: E61, H63, E62, F42, F62
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