This paper discusses how local tax rates of the business tax are set when communities compete for capital as a mobile factor. In a theoretical model communities provide public inputs financed by a tax on capital income in order to maximize a general objective function, which includes residents'...

The purpose of this paper is to test econometrically the existence of fiscal interactions between Belgian municipalities. At the time of writing, the motivation was to provide scientific support to the lively debate on fiscal competition that took place among Belgian politicians in the late...

A theoretical model describes the local choice of the tax rate on capital income. It establishes preferences and various fiscal conditions - including the tax rates of competing jurisdictions - as determinants of the tax rate. The empirical implications are tested using a large panel of...