The Theory of International Tax Competition and Coordination

72 Pages Posted: 18 Jul 2012 Last revised: 9 Jul 2014

See all articles by Michael Keen

Michael Keen

International Monetary Fund (IMF) - Fiscal Affairs Department; CESifo (Center for Economic Studies and Ifo Institute); Institute for Fiscal Studies (IFS); University of Tokyo

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Date Written: July 9, 2014

Abstract

This chapter surveys the theory of international tax competition and coordination, which, matching the increasing policy importance of the topic, has grown substantially over the last thirty years. It focuses on the taxation of capital income, stressing that issues arise not only in relation to movements of productive capital – the primary concern in the earliest literature – but also in relation to the shifting of paper profits. It sets out, assesses, and uses as a unifying framework, the two workhorse models in the area. After discussing the welfare properties and comparative statics of non-cooperative equilibria under unconstrained tax competition, the chapter analyses key issues of coordination (within subsets of countries, for instance) and a range of specific topics (such as the nature and impact of tax havens).

Keywords: International taxation, tax competition

Suggested Citation

Keen, Michael and Konrad, Kai A., The Theory of International Tax Competition and Coordination (July 9, 2014). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2012-06 , Available at SSRN: https://ssrn.com/abstract=2111895 or http://dx.doi.org/10.2139/ssrn.2111895

Michael Keen (Contact Author)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

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Washington, DC 20431
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CESifo (Center for Economic Studies and Ifo Institute)

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Germany

HOME PAGE: http://www.CESifo.de

Institute for Fiscal Studies (IFS)

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University of Tokyo ( email )

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Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance ( email )

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Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/home.cfm

Centre for Economic Policy Research (CEPR)

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, 81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, 53072
Germany

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