Minimum Taxes and Repeated Tax Competition

Arbeitspapier

An agreement about a lower bound for admissible tax rates can reduce the equilibrium tax rate (and thus welfare) in tax competition among fully symmetric countries. This is shown in an infinitely repeated game where the stage game describes the standard tax competition model with source-based taxes and symmetric countries. Repeated interaction may allow countries to sustain cooperation through implicit contracts. Lower bounds on tax rates ('minimum taxes') restrict the ability of countries to punish deviators. This makes cooperation harder to sustain. The introduction of a lower bound on feasible tax rates may thus harm all countries.

Object Details

• ISBN: 978-615-5024-50-4
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IEHAS Discussion Papers ; No. MT-DP - 2011/16

Classification and Topics

• Classification: Wirtschaft ; International Investment; Long-term Capital Movements ; International Fiscal Issues; International Public Goods
• Subject: tax competition ; tax harmonization ; minimum tax ; tax floor ; repeated games ; Unternehmensbesteuerung ; Steuertarif ; Steuerwettbewerb ; Steuerharmonisierung ; Wiederholte Spiele ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kiss, Áron
• Event: Veröffentlichung
• (who): Hungarian Academy of Sciences, Institute of Economics
• (where): Budapest
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/108219
• Last update: 10.03.2025, 11:43 AM CET