Symmetric Tax Competition under Formula Apportionment | Zendy

Eggert Wolfgang | Zendy; Schjelderup Guttorm | Zendy

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Symmetric Tax Competition under Formula Apportionment

Author(s) -

Eggert Wolfgang,

Schjelderup Guttorm

Publication year - 2003

Publication title -

journal of public economic theory

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.809

H-Index - 32

eISSN - 1467-9779

pISSN - 1097-3923

DOI - 10.1111/1467-9779.00141

Subject(s) - tax competition , economics , apportionment , capital (architecture) , residence , monetary economics , indirect tax , microeconomics , tax reform , outcome (game theory) , public economics , demographic economics , political science , law , history , archaeology

This paper compares property taxation to a corporate income tax based on formula apportionment in a model where identical countries compete to attract capital. We find that if countries can pair a residence–based capital tax with a property tax (source tax on capital) the tax equilibrium is efficient. In contrast, the use of a 2–factor FA scheme based on sales and capital combined with a residence–based capital tax leads to an inefficient outcome.

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