The Political Economy of Corporate Tax Harmonization - Why Do European Politicians (Dis)Like Minimum Tax Rates?

46 Pages Posted: 19 Jan 2009  

Steffen Osterloh

Center for European Economic Research (ZEW)

Friedrich Heinemann

Centre for European Economic Research (ZEW); University of Heidelberg - Alfred Weber Institute for Economics

Date Written: 2008

Abstract

Setting minimum tax rates is a well discussed way of mitigating pressure from tax competition. This paper investigates which motives shape the support for a minimum corporate tax among politicians. We make use of a unique data base: a survey among members of the European parliament. Our results confirm that the politicians' ideology as well as individual characteristics such as educational background exert a major in influence. Moreover, several predictions regarding national interests are derived from various standard tax competition models. These hypotheses are partly supported by the data; in particular, different national preferences for social equality shape the support. A comparison with survey results from the German Bundestag reveals that German politicians on the national level do not show different preferences towards tax rate harmonization.

Keywords: company taxation, tax harmonization, political economy, European Parliament

JEL Classification: D78, H25, H87

Suggested Citation

Osterloh, Steffen and Heinemann, Friedrich, The Political Economy of Corporate Tax Harmonization - Why Do European Politicians (Dis)Like Minimum Tax Rates? (2008). ZEW - Centre for European Economic Research Discussion Paper No. 08-108. Available at SSRN: https://ssrn.com/abstract=1328874 or http://dx.doi.org/10.2139/ssrn.1328874

Steffen Osterloh (Contact Author)

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Friedrich Heinemann

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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

University of Heidelberg - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

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