This paper tests whether OECD countries compete with each other over corporate taxes in order to attract investment. We develop two models: with …rm mobility, countries compete only over the statutory tax rate or the e¤ective average tax rate, while with capital mobility, countries compete...

In this paper, we pursue several goals; we first check if the downward trend in corporate income tax rates in Europe reflects a strategy of tax competition, and not a "yardstick competition" in neighboring countries. We estimate the scale of fiscal externalities on neighboring countries in terms...

The aim of this paper is to develop a better understanding of the literature dealing with strategic fiscal behaviours of small EU countries using estimations of tax reaction functions of competing national governments. Deriving a simple model of tax competition in a Nash and Stackelberg game, we...

This paper contributes to the small empirical literature that attempts to estimate tax reaction functions of national governments competing with other national governments. Our focus is on European countries. After presenting a simple theoretical model, we estimate reaction functions both for a...

Dramatic declines in capital tax rates among U.S. states and European countries have been linked by many commentators to tax competition and an inevitable “race to the bottom.” This paper provides an empirical analysis of the reaction of capital tax policy in a given U.S. state to changes in...

We re-examine, from a political economy perspective, the standard view that higher capital mobility results in lower capital taxes - a view, in fact, that is not confirmed by the available empirical evidence. We show that when a small economy is opened to capital mobility, the change of...

We re-examine the standard view that capital taxes are too low when capital is mobile across tax jurisdictions. We do so by emphasising a previously neglected implication of non-cooperative capital tax setting in a world with national currencies. Namely, capital taxes also affect foreign...

This Paper tests whether OECD countries compete with each other over corporate taxes in order to attract investment. We develop two models: with firm mobility, countries compete only over the statutory tax rate or the effective average tax rate, while with capital mobility, countries compete...

State borders create a discontinuous tax treatment of retail sales. In a Nash game, local tax rates will be higher on the low-state-tax side of a border. Local taxes will decrease from the nearest high-tax border and increase from the low-tax border. Using driving time from state borders and all...

We investigate the effects of European integration on corporate tax competition. Both economic and monetary integration result in lower transaction costs in �financial markets - by reducing capital controls, red tape and exchange rate uncertainty - and thereby in higher capital mobility....