Chasing the Firm or Rewarding the Partisans? Domestic Responses to International Tax Competition

28 Pages Posted: 17 Nov 2009

See all articles by Nathan M. Jensen

Nathan M. Jensen

Washington University in St. Louis - Department of Political Science

René Lindstädt

University of Birmingham

Date Written: November 17, 2009

Abstract

There is a growing literature in political science on how corporate tax cuts in one country can trigger competitive tax cuts in other countries. In this paper, we empirically estimate the determinants of corporate tax reductions in OECD countries using a Bayesian multilevel modeling approach that allows us to examine how domestic factors interact with global tax competition. Our findings suggest that while domestic politics can mitigate tax competition in some cases, it does not constrain domestic responses to tax competition enough to eliminate partisan differences. In fact, rather than make partisanship irrelevant, corporate tax competition seems to amplify the differences in the tax policy positions of left and right governments.

Suggested Citation

Jensen, Nathan M. and Lindstaedt, Rene, Chasing the Firm or Rewarding the Partisans? Domestic Responses to International Tax Competition (November 17, 2009). Available at SSRN: https://ssrn.com/abstract=1507885 or http://dx.doi.org/10.2139/ssrn.1507885

Nathan M. Jensen (Contact Author)

Washington University in St. Louis - Department of Political Science ( email )

219 Eliot Hall
St. Louis, MO 63130
United States

Rene Lindstaedt

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

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