We introduce tax competition for mobile labor into an optimal-taxation model with two skill levels. We analyze a symmetric subgame-perfect Nash equilibrium of the game between two governments and two taxpayer populations. Tax competition reduces the distortion from the informational asymmetry...

We construct a general equilibrium model of a two-country trading block where governments through tax policies attract mobile capital, and provide an imported public consumption good. At Nash equilibrium, when the public good is under-provided, (i) a country with a large GDP, has a large Nash...

The residence-based taxation of interest income in the EU faces the difficulty that taxpayers may evade taxation by holding bank accounts in other countries. The EU therefore makes considerable efforts to achieve cooperation among EU member states in order to improve tax enforcement. The present...

An important issue in public policy debates is the effect of international migration on welfare in source and host countries. We address this issue by constructing a general equilibrium model of a two-class source or host country. Each country produces many traded and non-traded goods, uses...

We consider a two small open economies model with cross-border pollution that is generated from consumption. Within this framework we examine i) the non-cooperative equilibrium consumption taxes and compare them to when pollution is only local, ii) the cooperative equilibrium consumption taxes...

This paper studies the implications of an increase in the price of necessities, which disproportionally hurts the poor, for optimal income taxation. Our analyses show that, when the government is utilitarian and disutility from labor supply is linear, the optimal net nominal tax schedule is...