Download This PaperFighting Multiple Tax Havens
Journal of International Economics, Forthcoming
Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2011-01
30 Pages Posted: 30 Dec 2010 Last revised: 29 Feb 2012
There are 2 versions of this paper
Fighting Multiple Tax Havens
Fighting Multiple Tax Havens
Date Written: January 1, 2011
Abstract
This paper develops a competition theory framework that evaluates an important aspect of the OECD's Harmful Tax Practices Initiative against tax havens. We show that the sequential nature of the process is harmful and more costly than a "big bang" multilateral agreement. The sequentiality may even prevent the process from being completed successfully. Closing down a subset of tax havens reduces competition among the havens that remain active. This makes their "tax haven business" more profitable and shifts a larger share of rents to these remaining tax havens, making them more reluctant to give up their "tax haven business". Moreover, the outcome of this process, reducing the number of tax havens, but not eliminating them altogether, may reduce welfare in the OECD.
Keywords: Tax haven, harmful tax practices, bidding for haven inactivation
JEL Classification: F21, H26, H77, H87
Suggested Citation: Suggested Citation
Kai A. Konrad (Contact Author)
Max Planck Institute for Tax Law and Public Finance ( email )
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