Strategic nonlinear income tax competition with perfect labor mobility

• 成果类型: Article
• 署名作者: Bierbrauer, Felix; Brett, Craig; Weymark, John A.
• 署名单位: University of Cologne; Mount Allison University; Vanderbilt University
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2013.08.001
• 发表日期: 2013
• 页码: 292-311
• 关键词: Income tax competition; labor mobility; Optimal income taxation; Race to the bottom

摘要

Tax competition between two governments who choose nonlinear income tax schedules to maximize the average utility of their residents when skills are unobservable and labor is perfectly mobile is examined. We show that there are no equilibria in which there is a skill type that pays positive taxes to one country and whose utility is larger than the average utility in the other country or in which the lowest skilled are subsidized. We also show that it is possible for the most highly skilled to receive a net transfer funded by taxes on lower skilled individuals in equilibrium. These findings confirm the race-to-the-bottom thesis in this setting. (C) 2013 Elsevier Inc. All rights reserved.