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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

4 Issues per year


IMPACT FACTOR 2016: 0.252
5-year IMPACT FACTOR: 0.755

CiteScore 2017: 0.50

SCImago Journal Rank (SJR) 2017: 0.414
Source Normalized Impact per Paper (SNIP) 2017: 0.531

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1935-1682
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Volume 4, Issue 1

Issues

Volume 6 (2006)

Volume 4 (2004)

Volume 2 (2002)

Volume 1 (2001)

Tax Competition and Tax Harmonization With Evasion

Néstor Gandelman / Rubén Hernández-Murillo
Published Online: 2004-05-28 | DOI: https://doi.org/10.2202/1538-0653.1219

Abstract

We examine a two-jurisdiction tax competition environment where local governments can only imperfectly monitor where agents pay taxes and risk-averse individuals may choose to cross borders to pay lower taxes in a neighboring location.

In a game between local authorities, we find that, when communities differ in size, in equilibrium the smaller community sets lower taxes and attracts agents from the larger jurisdiction. With identical communities, tax rates must be equal.

Finally, we examine the incentives of jurisdictions to harmonize tax rates and find that, whenever the smaller community benefits from tax harmonization, the larger jurisdiction will benefit also.

Keywords: Tax Competition; Tax Evasion; Tax Harmonization; Risk Aversion

About the article

Published Online: 2004-05-28


Citation Information: Topics in Economic Analysis & Policy, Volume 4, Issue 1, ISSN (Online) 1538-0653, DOI: https://doi.org/10.2202/1538-0653.1219.

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