Tax competition in a federation: the role of tax assignment
Duran-Vigneron, Pascale; Breuillé, Marie-Laure; Samson, Anne-Laure (2013-06), Tax competition in a federation: the role of tax assignment, 12th journées Louis-André Gérard-Varet, 2013-06, Aix en Provence, France
TypeCommunication / Conférence
Conference title12th journées Louis-André Gérard-Varet
Conference cityAix en Provence
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Laboratoire d'Economie de Dauphine [LEDa]
Abstract (EN)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.
Subjects / KeywordsInter-municipal cooperation; tax competition; Fiscal Federalism
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