In this paper, an income tax competition model is considered, in which two local governments collect income taxes for both redistributional purposes, as well as to fund the provision of local public goods. The local governments seek to maximize the average utility of their residents, while a finite population of perfectly mobile, heterogeneous agents make labor/leisure and residency decisions, ...

Tax competition between two governments who choose nonlinear income tax schedules to maximize the average utility of its residents when skills are unobservable and labor is perfectly mobile is examined. We show that there are no Nash equilibria in which there is a skill type that pays positive taxes to one country and whose utility is larger than the average utility in the other country or in w...

Tax competition among states and jurisdictions has already been examined many times in the economic literature. However, the main scope of the research was focused on a tax rates competition in income taxes and its consequences in bringing direct investments. This scripture/commentary tries to analyze various instruments and beneficiaries of the tax system competition and provide a general over...

The paper develops a political economy model to assess the interplay between party formation and an environmental policy dimension viewed as secondary to the redistributive dimension. We de…ne being a secondary issue in terms of the intensity of preferences over this issue rather than in terms of the proportion of voters who care for the environment. Equilibrium policies are the outcome of an e...

Brain Drain, Fiscal Competition, and Public Education Expenditure This paper uses a two-country model with integrated markets for high-skilled labor to analyze the opportunities and incentives for national governments to provide higher education. Countries can differ in productivity, and education is financed through a wage tax, so that brain drain affects the tax base and has agglomeration eff...

This paper considers education investment and public education policy in closed and open economies with an extortionary government. The extortionary government in a closed economy chooses an education policy in order to overcome a hold-up problem of time-consistent taxation similar to benevolent governments. The two types of government differ in their education policies if highly productive lab...

This paper analyzes the effect of skill heterogeneity on regional patterns of production and housing in the presence of pecuniary externalities within a general-equilibrium framework, assuming monopolistic competition in intermediate goods markets. It shows that the interplay of heterogeneous skills and comparatively homogeneous land demand triggers skill segmentation and agglomeration. The cor...

underground economy affects important indexes such as formal gdp, unemployment, consumption, production and etc. therefore it is necessary to identify elements and factors which affect underground economy to restrict it. surveys and studies indicate the size of iran’s underground economy is high and taxes, quantity and quality of regulations and performance of formal economy are the important f...

Differential tax analysis is used to show how the socially optimal fiscal-tax to liquidity-tax ratio changes with the relative size of the tax-evading hidden economy. The smaller the relative size of the hidden economy, the larger the optimal fiscal-tax to liquidity-tax ratio. The empirical cross-section and panel evidence supports this theoretical result. JEL: E31, E52, H21, O17

This paper analyzes the impact of tax competition between two countries of unequal per-capita capital endowments on tax rates and efficiency when distorting wage, residence-based and source-based capital taxes (or any combination of two instruments) are available for governments. The national welfare costs and benefits of tax rate variations are shown to be ambiguous in the asymmetric Nash equi...