Browsing Working Papers (ECON) by Author "Huizinga, Harry"
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Huizinga, Harry; Nielsen, Søren Bo (København, 2005)[More information][Less information]
Abstract: Europe has seen several proposals for tax coordination only in the area of capital income taxation, leaving countries free to adjust their labor taxes. The expectation is that higher capital income tax revenues would cause countries to reduce their labor taxes. This paper shows that such changes in the mix of capital and labor taxes brought on by capital income tax coordination can potentially be welfare reducing. This reflects that in a non-cooperative equilibrium capital income taxes may be more distorting from an international perspective than are labor income taxes. Simulations with a simple model calibrated to EU public finance data suggest that countries indeed lower their labor taxes in response to higher coordinated capital income taxes. The overall welfare effects of capital income tax coordination, however, are estimated to remain positive. JEL Classification: F20, H87 URI: http://hdl.handle.net/10398/7582 Files in this item: 1
wp24-2005.pdf (343.7Kb) -
Huizinga, Harry; Nielsen, Søren Bo (København, 2004)[More information][Less information]
Abstract: Internationalization offers enhanced opportunities for individuals to place savings abroad and evade domestic saving taxation. This paper asks whether the concomi- tant loss of saving taxation necessarily is harmful. To this end we construct a model of many symmetric countries in which public goods are financed by taxes on saving and investment. There is international cross-ownership of firms, and countries are assumed to be unable to tax away pure profits. Countries then face an incentive to impose a rather high investment tax also borne by foreigners. In this setting, the loss of the saving tax instrument on account of international tax evasion may prevent the overall saving-investment tax wedge from becoming too high, and hence may be beneficial for moderate preferences for public goods. A world with 'high- spending' governments, in contrast, is made worse off by the loss of saving taxes, and hence stands to gain from international cooperation to restore saving taxation. JEL-Classifcation: H87, H21 Keywords: Capital income taxation, cross-ownership, coordination URI: http://hdl.handle.net/10398/7535 Files in this item: 1
wpec152004.pdf (172.2Kb)
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