Capital Mobility and Tax Competition: A Survey

Foundations and Trends in Microeconomics, Vol. 1, No. 1, pp. 1-62, 2005

63 Pages Posted: 17 Jun 2003

See all articles by Clemens Fuest

Clemens Fuest

ifo Institute – Leibniz Institute for Economic Research at the University of Munich; Ludwig-Maximilians-University, Munich; Center for Economic Studies (CES)

Bernd Huber

Ludwig Maximilian University of Munich - Staatswirtschaftliches Institut; CESifo (Center for Economic Studies and Ifo Institute)

Jack Mintz

University of Calgary - The School of Public Policy; CESifo (Center for Economic Studies and Ifo Institute)

Abstract

This paper surveys the literature on the implications of international capital mobility for national tax policies. Our main issue for consideration in this survey is whether taxation of income - specifically capital income - will survive, how border crossing investment is taxed relative to domestic investment, and whether welfare gains can be achieved through international tax coordination. We develop a a "working-horse model" of multinational investment which allows to derive many of the key results from the literature on international taxation in a unified framework. Moreover, we put special emphasis on the problem of tax competition and financial arbitrage.

Keywords: Tax Competition, Capital Mobility, Tax Policy

JEL Classification: H21, H25

Suggested Citation

Fuest, Clemens and Huber, Bernd and Mintz, Jack, Capital Mobility and Tax Competition: A Survey. Foundations and Trends in Microeconomics, Vol. 1, No. 1, pp. 1-62, 2005. Available at SSRN: https://ssrn.com/abstract=415042

Clemens Fuest (Contact Author)

ifo Institute – Leibniz Institute for Economic Research at the University of Munich

Poschinger Str. 5
Munich, DE 81679
Germany
++89-9224-1430 (Phone)

Ludwig-Maximilians-University, Munich ( email )

Schackstrasse 4 / II
Munich, DE 80539
Germany

Center for Economic Studies (CES) ( email )

Schackstr. 4
Munich, DE 80539
Germany
++89 2180-2748 (Phone)
++89 2180-17845 (Fax)

Bernd Huber

Ludwig Maximilian University of Munich - Staatswirtschaftliches Institut ( email )

Ludwigstrasse 28/III VG
D-80799 Munich
Germany
+49 89 2180-2874 (Phone)
+49 89 2180-3128 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Jack Mintz

University of Calgary - The School of Public Policy ( email )

Calgary, Alberta
Canada
403-220-7661 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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