Optimal Income Taxation with Tax Competition

We introduce tax competition for mobile labor into an optimal-taxation model with two skill levels. We analyze a symmetric subgame-perfect Nash equilibrium of the game between two governments and two taxpayer populations. Tax competition reduces the distortion from the informational asymmetry and increases employment of the less productive individuals. When countries are heterogeneous, this effect is more pronounced in the smaller country.

[1]  Harold H. Zhang,et al.  Does Financial Constraint Affect Shareholder Taxes and the Cost of Equity Capital? , 2011 .

[2]  Massimo Bordignon,et al.  Who Do You Blame in Local Finance? An Analysis of Municipal Financing in Italy , 2010, SSRN Electronic Journal.

[3]  Chris Stewart,et al.  EU Banks Rating Assignments: Is There Heterogeneity Between New and Old Member Countries? , 2010 .

[4]  Maela Giofré Investor Protection and Foreign Stakeholders , 2010, SSRN Electronic Journal.

[5]  M. Dahan,et al.  Fiscal Rules and Composition Bias in OECD Countries , 2010 .

[6]  T. Aronsson,et al.  Redistributive Income Taxation under Outsourcing and Foreign Direct Investment , 2010, SSRN Electronic Journal.

[7]  Michael Melvin,et al.  Active Currency Investing and PerformanceBenchmarks , 2011, The Journal of Portfolio Management.

[8]  M. Keen,et al.  Tax competition and Leviathan , 1996 .

[9]  Labor mobility and income tax competition , 2003 .

[10]  Andreas Haufler Taxation in a global economy , 2001 .

[11]  T. Eichner,et al.  Efficient Management of Insecure Fossil Fuel Imports Through Taxing (!) Domestic Green Energy? , 2010, SSRN Electronic Journal.

[12]  S. Gächter,et al.  Culture and cooperation , 2010, Philosophical Transactions of the Royal Society B: Biological Sciences.

[13]  T. Andersen Why Do Scandinavians Work? , 2010 .

[14]  Mehmet Bac,et al.  The Old-Boy Network and the Quality of Entrepreneurs , 2010, SSRN Electronic Journal.

[15]  Shafik Hebous,et al.  THE EFFECTS OF TAXATION ON THE LOCATION DECISION OF MULTINATIONAL FIRMS: M&A VERSUS GREENFIELD INVESTMENTS , 2010, National Tax Journal.

[16]  F. Lichtenberg,et al.  The Contribution of Pharmaceutical Innovation to Longevity Growth in Germany and France , 2010, SSRN Electronic Journal.

[17]  W. Greene,et al.  Do Undergraduate Majors or Ph.D. Students Affect Faculty Size? , 2010, SSRN Electronic Journal.

[18]  Lasse Steiner,et al.  Pay as you go: a new proposal for museum pricing , 2010, SSRN Electronic Journal.

[19]  A. Razin,et al.  Fiscal and Migration Competition , 2010, SSRN Electronic Journal.

[20]  Peter M. Mieszkowski,et al.  Pigou, Tiebout, Property Taxation, and the Underprovision of Local Public Goods , 1986, Taxation in Theory and Practice.

[21]  H. Bohn,et al.  Population Under a Cap on Greenhouse Gas Emissions , 2010 .

[22]  H. Fraisse Labour Disputes and the Game of Legal Representation , 2010, SSRN Electronic Journal.

[23]  B. Frey,et al.  World Heritage List: does it make sense? , 2010, SSRN Electronic Journal.

[24]  Alain Trannoy,et al.  Shall we keep the highly skilled at home? The optimal income tax perspective , 2011, Soc. Choice Welf..

[25]  Huw Dixon A Unified Framework for Using Micro-Data to Compare Dynamic Wage and Price Setting Models , 2010, SSRN Electronic Journal.

[26]  R. MacDonald,et al.  A Panel Data Investigation of Real Exchange Rate Misalignment and Growth , 2010, SSRN Electronic Journal.

[27]  M. Morelli,et al.  Competitive Nonlinear Taxation and Constitutional Choice , 2012 .

[28]  R. Hartley,et al.  A New Approach to Solving Production-Appropriation Games with Many Heterogeneous Players , 2010, SSRN Electronic Journal.

[29]  P. Klemperer,et al.  Chapter 31 Coordination and Lock-In: Competition with Switching Costs and Network Effects , 2007 .

[30]  Andrey Launov,et al.  Estimating Incentive and Welfare Effects of Nonstationary Unemployment Benefits , 2010, SSRN Electronic Journal.

[31]  Thorsten Upmann,et al.  Labor markets and capital tax competition , 2010 .

[32]  A. Cigno,et al.  How to Deal with Covert Child Labour, and Give Children an Effective Education, in a Poor Developing Country , 2010, SSRN Electronic Journal.

[33]  Marcel Boyer,et al.  Optimal Liability Sharing and Court Errors: An Exploratory Analysis , 2010, SSRN Electronic Journal.

[34]  Sebastian Kube,et al.  The Interaction of Legal and Social Norm Enforcement , 2010, SSRN Electronic Journal.

[35]  Alessandro Gambini,et al.  Long-lasting bank relationships and growth of firms , 2010, SSRN Electronic Journal.

[36]  Balázs Égert,et al.  Exports and Property Prices in France: Are They Connected? , 2010, SSRN Electronic Journal.

[37]  Guttorm Schjelderup,et al.  Internationally mobile firms and tax policy , 1998 .

[38]  Thomas Eichner,et al.  International Carbon Emissions Trading and Strategic Incentives to Subsidize Green Energy , 2010, SSRN Electronic Journal.

[39]  Leonid V. Azarnert Après nous le Déluge: fertility and the intensity of struggle against immigration , 2010, SSRN Electronic Journal.

[40]  B. Huber Tax competition and tax coordination in an optimum income tax model , 1999 .

[41]  A. Trannoy,et al.  Optimal Income Tax under the Threat of Migration by Top-Income Earners , 2010 .

[42]  M. Pesaran,et al.  Supply, Demand and Monetary Policy Shocks in a Multi-Country New Keynesian Model , 2010, SSRN Electronic Journal.

[43]  H̊akan Selin Marginal Tax Rates and Tax‐Favoured Pension Savings of the Self‐Employed: Evidence from Sweden , 2010 .

[44]  M. Keen,et al.  Tax competition and Leviathon , 1994 .

[45]  Stefan Voigt,et al.  Determinants of Constitutional Change: Why do Countries Change Their Form of Government? , 2010, SSRN Electronic Journal.

[46]  Johannes Becker,et al.  Strategic Trade Policy Through the Tax System , 2010, SSRN Electronic Journal.

[47]  J. Ligthart,et al.  Has the Euro Affected the Choice of Invoicing Currency? , 2010, SSRN Electronic Journal.

[48]  T. Eichner,et al.  Tax-Competition with Involuntary Unemployment , 2010, SSRN Electronic Journal.

[49]  Kyriakos C. Neanidis,et al.  Financial Dollarization and European Union Membership , 2010, SSRN Electronic Journal.

[50]  H. Bohn,et al.  The Economic Consequences of Rising U.S. Government Debt: Privileges at Risk , 2010, SSRN Electronic Journal.

[51]  Thomas Moutos,et al.  Whither Public Interest: The Case of Greece's Public Finances , 2010, SSRN Electronic Journal.

[52]  X. Vives Competition and Stability in Banking , 2010, SSRN Electronic Journal.

[53]  Rick van der Ploeg,et al.  Do Natural Resources Depress Income Per Capita? , 2010, SSRN Electronic Journal.

[54]  I. Wooton,et al.  A race beyond the bottom: the nature of bidding for a firm , 2010, SSRN Electronic Journal.

[55]  Lukas Menkhoff,et al.  Limit-Order Submission Strategies under Asymmetric Information , 2010, SSRN Electronic Journal.

[56]  Mats Persson,et al.  A Continuous Theory of Income Insurance , 2010, SSRN Electronic Journal.

[57]  J. Mirrlees Migration and optimal income taxes. , 1982, Journal of public economics.

[58]  Interjurisdictional Linkages and the Scope for Interventionist Legal Harmonization , 2010 .

[59]  J. Stiglitz SELF-SELECTION AND PARETO EFFICIENT , 1982 .

[60]  Ruslan Lukach,et al.  The Patterns of Inter-Firm and Inter-Industry Knowledge Flows in the Netherlands , 2010, SSRN Electronic Journal.

[61]  Ludger Woessmann,et al.  School competition and students’ entrepreneurial intentions: international evidence using historical Catholic roots of private schooling , 2010, SSRN Electronic Journal.

[62]  J. Mirrlees An Exploration in the Theory of Optimum Income Taxation an Exploration in the Theory of Optimum Income Taxation L Y 2 , 2022 .

[63]  W. Richter,et al.  Delaying Integration of Immigrant Labor for the Purpose of Taxation , 2002, SSRN Electronic Journal.

[64]  J. Ligthart,et al.  Coordinated Tax-Tariff Reforms, Informality, and Welfare Distribution , 2010, SSRN Electronic Journal.