Tax Competition and Tax Coordination in the European Union

This paper examines the tax competition literature and attempts to draw out its implications for the debate on corporate tax coordination within the EU. It begins with the early basic tax competition model, which derives conditions under which underprovision of public services occurs and tax harmoni...

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Bibliographic Details
Published in:International tax and public finance 2003-11, Vol.10 (6), p.651-71
Main Author: Zodrow, George R
Format: Article
Language:English
Subjects:
Competition
Corporate income tax
Corporate taxes
Efficiency
Europe
European Union
Finance
Fiscal policy
Flat rates
Income redistribution
International taxation
Member states
Public services
Studies
Tax base
Tax competition
Tax increases
Tax rates
Tax reform
Taxation
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Summary:This paper examines the tax competition literature and attempts to draw out its implications for the debate on corporate tax coordination within the EU. It begins with the early basic tax competition model, which derives conditions under which underprovision of public services occurs and tax harmonization unambiguously improves welfare for all states in the union. The paper then turns to a wide variety of extensions of this model, some of which reinforce its results and others that yield rather different conclusions. The analysis concludes by considering the implications of the tax competition literature for the debate on EU corporate tax coordination, drawing on some recent efforts to synthesize this vast literature by estimating the efficiency costs of tax competition and simulating the efficiency gains from various tax coordination plans. Copyright 2003 by Kluwer Academic Publishers
ISSN:0927-5940
1573-6970
DOI:10.1023/A:1026377819946