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Tax Competition, Budget Rigidities, and Fairness Norms |
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Abstract:
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This paper analyses fiscal competition under budget rigidities and tax equity (fair-ness norms). We outline a numerically solvable political economic model that treats the outcome of tax competition as one argument in the governments utility function, the others being public expenditure and tax equity. In accordance with theoretical research, we demonstrate that tax competition tends to reduce taxes on mobile capital while increasing the tax rates on relatively immobile labor. How-ever, taxes on mobile capital do not vanish in equilibrium. Instead, the govern-ment being least restricted by budget constraints and equity norms reduces tax rates slightly below the lowest tax rates of those countries, in which governments are more constrained. Analyzing data from 21 OECD countries between 1965 and 2000 we find empirical support for our theoretical findings. |
Most Common Document Word Stems:
tax (255), countri (155), capit (153), govern (123), competit (107), rate (105), fair (99), budget (86), norm (82), m (81), mobil (77), j (72), n (57), model (44), rigid (43), labor (42), polit (41), constraint (41), 34 (39), 33 (37), economi (37), |
Author's Keywords:
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political economy; tax competition; tax equity; public expenditure; fiscal policy; spatial panel econometrics |
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Association:
Name: American Political Science Association URL: http://www.apsanet.org
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Citation:
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MLA Citation:
| Pluemper, Thomas., Troeger, Vera. and Winner, Hannes. "Tax Competition, Budget Rigidities, and Fairness Norms" Paper presented at the annual meeting of the American Political Science Association, Hilton Chicago and the Palmer House Hilton, Chicago, IL, Sep 02, 2004 <Not Available>. 2009-05-26 <http://www.allacademic.com/meta/p59790_index.html> |
APA Citation:
| Pluemper, T. , Troeger, V. E. and Winner, H. , 2004-09-02 "Tax Competition, Budget Rigidities, and Fairness Norms" Paper presented at the annual meeting of the American Political Science Association, Hilton Chicago and the Palmer House Hilton, Chicago, IL Online <.PDF>. 2009-05-26 from http://www.allacademic.com/meta/p59790_index.html |
Publication Type: Conference Paper/Unpublished Manuscript Review Method: Peer Reviewed Abstract: This paper analyses fiscal competition under budget rigidities and tax equity (fair-ness norms). We outline a numerically solvable political economic model that treats the outcome of tax competition as one argument in the governments utility function, the others being public expenditure and tax equity. In accordance with theoretical research, we demonstrate that tax competition tends to reduce taxes on mobile capital while increasing the tax rates on relatively immobile labor. How-ever, taxes on mobile capital do not vanish in equilibrium. Instead, the govern-ment being least restricted by budget constraints and equity norms reduces tax rates slightly below the lowest tax rates of those countries, in which governments are more constrained. Analyzing data from 21 OECD countries between 1965 and 2000 we find empirical support for our theoretical findings. |
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| Document Type: |
.pdf |
| Page count: |
33 |
| Word count: |
11671 |
| Text sample: |
| 1 Tax Competition under Budget Rigidities and Fairness Norms Thomas Plümper* Vera E. Troeger# and Hannes Winner+ * Department of Political Science University of Konstanz # Max-Planck-Institute for Economic Systems Jena + Department of Economics and Statistics University of Innsbruck Summary This paper analyses fiscal competition under budget rigidities and tax equity (fair- ness norms). We outline a numerically solvable political economic model that treats the outcome of tax competition as one argument in the governments utility function the |
| ... Corporate taxes on income profits and capital gains; 2100 ... Social security 33 contributions of employees; 2200 ... Social security contributions of employers; 3000 ... Taxes on payroll and workforce; 4000 ... Taxes on property; 5125 ... Taxes on invest- ment goods; 5212 ... Motor vehicle duties not paid by households; 6100 ... Other taxes solely paid by business For the OECD National Accounts items we use abbreviations in capitalized let- ters: OS ... Total operating surplus of |
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