The Taxation of Financial Capital under Asymmetric Information and the Tax-competition Paradox
Journal
The Scandinavian journal of economics
ISSN
0347-0520
ISSN-Digital
1467-9442
Type
journal article
Date Issued
2004
Author(s)
Abstract
Information sharing between governments is examined in an optimal-taxation framework. We introduce a taxonomy of alternative systems of international capital-income taxation and characterize the choice of tax rates and information exchange. The model reproduces the conclusion found in earlier literature that integration of international caopital markets may lead to the under-provision of publicly provided goods. However, in contrast to previous results in the literature, under-provision occurs due to inefficiently coordinated expectations. We show that there exists a second equilibrium with an efficient level of public-good provision as well as complete and voluntary information exchange between national tax authorities.
Language
English
Keywords
Tax competition
information exchange
HSG Classification
not classified
Refereed
Yes
Publisher
Blackwell
Publisher place
Oxford
Volume
106
Number
1
Start page
83
End page
105
Pages
23
Subject(s)
Division(s)
Eprints ID
223687