The Effects of Tax Competition when Politicians Create Rents to Buy Political Support

Publikation: Working paperForskning

Standard

The Effects of Tax Competition when Politicians Create Rents to Buy Political Support. / Eggert, Wolfgang; Sørensen, Peter Birch.

Economic Policy Research Unit. Department of Economics, University of Copenhagen, 2007.

Publikation: Working paperForskning

Harvard

Eggert, W & Sørensen, PB 2007 'The Effects of Tax Competition when Politicians Create Rents to Buy Political Support' Economic Policy Research Unit. Department of Economics, University of Copenhagen.

APA

Eggert, W., & Sørensen, P. B. (2007). The Effects of Tax Competition when Politicians Create Rents to Buy Political Support. Economic Policy Research Unit. Department of Economics, University of Copenhagen.

Vancouver

Eggert W, Sørensen PB. The Effects of Tax Competition when Politicians Create Rents to Buy Political Support. Economic Policy Research Unit. Department of Economics, University of Copenhagen. 2007.

Author

Eggert, Wolfgang ; Sørensen, Peter Birch. / The Effects of Tax Competition when Politicians Create Rents to Buy Political Support. Economic Policy Research Unit. Department of Economics, University of Copenhagen, 2007.

Bibtex

@techreport{53d5a0c0a4d911dcbee902004c4f4f50,
title = "The Effects of Tax Competition when Politicians Create Rents to Buy Political Support",
abstract = "We set up a probabilistic voting model to explore the hypothesis that tax competition improves public sector efficiency and social welfare. In the absence of tax base mobility, distortions in the political process induce vote-maximising politicians to create rents to public sector employees. Allowing tax base mobility may be welfare-enhancing up to a point, because the ensuing tax competition will reduce rents. However, if tax competition is carried too far, it will reduce welfare by causing an underprovision of public goods. Starting from an equilibrium where tax competition has eliminated all rents, a coordinated rise in capital taxation will always be welfare-improving. For plausible parameter values it will even be welfare-enhancing to carry tax coordination beyond the point where rents to public sector workers start to emerge",
keywords = "Faculty of Social Sciences, tax competition, rent seeking",
author = "Wolfgang Eggert and S{\o}rensen, {Peter Birch}",
note = "JEL Classification: D72, H73, H87",
year = "2007",
language = "English",
publisher = "Economic Policy Research Unit. Department of Economics, University of Copenhagen",
type = "WorkingPaper",
institution = "Economic Policy Research Unit. Department of Economics, University of Copenhagen",

}

RIS

TY - UNPB

T1 - The Effects of Tax Competition when Politicians Create Rents to Buy Political Support

AU - Eggert, Wolfgang

AU - Sørensen, Peter Birch

N1 - JEL Classification: D72, H73, H87

PY - 2007

Y1 - 2007

N2 - We set up a probabilistic voting model to explore the hypothesis that tax competition improves public sector efficiency and social welfare. In the absence of tax base mobility, distortions in the political process induce vote-maximising politicians to create rents to public sector employees. Allowing tax base mobility may be welfare-enhancing up to a point, because the ensuing tax competition will reduce rents. However, if tax competition is carried too far, it will reduce welfare by causing an underprovision of public goods. Starting from an equilibrium where tax competition has eliminated all rents, a coordinated rise in capital taxation will always be welfare-improving. For plausible parameter values it will even be welfare-enhancing to carry tax coordination beyond the point where rents to public sector workers start to emerge

AB - We set up a probabilistic voting model to explore the hypothesis that tax competition improves public sector efficiency and social welfare. In the absence of tax base mobility, distortions in the political process induce vote-maximising politicians to create rents to public sector employees. Allowing tax base mobility may be welfare-enhancing up to a point, because the ensuing tax competition will reduce rents. However, if tax competition is carried too far, it will reduce welfare by causing an underprovision of public goods. Starting from an equilibrium where tax competition has eliminated all rents, a coordinated rise in capital taxation will always be welfare-improving. For plausible parameter values it will even be welfare-enhancing to carry tax coordination beyond the point where rents to public sector workers start to emerge

KW - Faculty of Social Sciences

KW - tax competition

KW - rent seeking

M3 - Working paper

BT - The Effects of Tax Competition when Politicians Create Rents to Buy Political Support

PB - Economic Policy Research Unit. Department of Economics, University of Copenhagen

ER -

ID: 1731324