Full movement from the destination principle to the origin principle would lead to changes in VAT revenues in EU countries. Hence a clearing mechanism is necessary to rectify such imbalances. To estimate the relevance of VAT evasion this study quantifies the annual amounts of hypothetical VAT...

This paper analyzes tax competition for mobile capital among jurisdictions where capital is employed by the subsidiaries of a unitary firm. Equity capital of the unitary firm is taxed under a formula apportionment scheme, and each jurisdiction has the leeway to choose its desired mix of...

This paper analyses non-cooperative provision of public consumption goods and public production factors. Contrary to previous literature, a number of situations is identified where public consumption goods are oversupplied and public production factors are undersupplied. With source and...

We analyze the welfare consequences of tax coordination agreements that cover taxes on mobile capital and on immobile labor. In doing so, we take into account two important institutional details. First, we incorporate decentralized wage bargaining, giving rise to involuntary unemployment....

Models of capital tax competition typically assume that countries have identical per-capita endowments. This paper presents a model with endogenous capital and labor supply where countries are unequal, and shows that countries do not necessarily engage in wasteful tax competition, in the sense...

This paper explores the optimal international tax policy of a small open economy with inbound and outbound flows of both portfolio and direct investment. Only three independent conditions determine the optimal rates of six taxes, implying that there are no unique values of optimal tax rates. For...

To determine the welfare effects of tax coordination, it is often assumed that one tax is jointly increased and all other policy instruments are held constant. This paper, in contrast, analyzes partial coordination in the sense that each country can still adjust another tax, which is not subject...

We analyze the decision rules governing public employment policy, capital allocation between private and public sector, and the size of the public sector in a two-type and two-sector optimal nonlinear income-tax model with endogenous wages. The government can reduce wage inequality in the...

Is it a sheer coincidence that the egalitarian Scandinavian countries have significantly larger government employment shares than the much less egalitarian United States? A positive correlation between equality and government employment share in the OECD indicates that it is not a coincidence....

This paper contributes to the literature providing indirect evidence for profit shifting within multinational companies. In contrast to the previous studies, we take account of the tax responsiveness of the capital stock and analyze the effect of corporate taxes on both pre- and posttax...