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
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: Suggested Citation