Title: Tax competition in a federation: the role of tax assignment
Abstract: The purpose of this paper is to compare different forms of inter-municipal tax cooperation. We use a tax competition model in a two-tier framework, where the two tax bases are interdependently mobile. We consider three different tax regimes: tax-base sharing for the two tax bases, tax harmonization of one tax rate, and a mixed form of the preceding two regimes. In this framework, both horizontal externalities (at the municipal and inter-municipal level) and vertical tax externalities (bottom-up and top-down) occur. We show that cooperation generates an increase of tax burden, whatever the form of tax cooperation, and we provide a comparison of the different tax regimes.
Publication Year: 2013
Publication Date: 2013-06-01
Language: en
Type: preprint
Access and Citation
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot