Does Tax Competition Tame the Leviathan?

Détails

ID Serval
serval:BIB_36DE10C116A0
Type
Article: article d'un périodique ou d'un magazine.
Collection
Publications
Institution
Titre
Does Tax Competition Tame the Leviathan?
Périodique
Journal of Public Economics
Auteur⸱e⸱s
Brülhart Marius, Jametti Mario
Statut éditorial
Publié
Date de publication
09/2019
Peer-reviewed
Oui
Volume
177
Langue
anglais
Résumé
We study the impact of tax competition on equilibrium taxes and welfare, focusing on the jurisdictional fragmentation of federations. In a representative-agent model of fiscal federalism, fragmentation among jurisdictions with benevolent tax-setting authorities unambiguously reduces welfare. If, however, tax-setting authorities pursue revenue maximization,fragmentation, by pushing down equilibrium tax rates, may under certain conditions increase citizen welfare. We exploit the highly decentralized and heterogeneous Swiss fiscal system as a laboratory for the estimation of these effects. While for purely direct-democratic jurisdictions (which we associate with relatively benevolent tax setting) we find that tax rates increase in fragmentation, fragmentation has a moderating effect on the tax rates of jurisdictions with some degree of delegated government. Our results thereby support the view that tax competition can be second-best welfare improving by constraining the scope for public-sector revenue maximization.
Mots-clé
tax competition, optimal taxation, government preferences, fiscal federalism, direct democracy
Création de la notice
20/06/2019 10:51
Dernière modification de la notice
22/01/2020 7:19
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