Tax Competition and the Distribution of Income

Publication date
2019
Document type
Research article
Author
Yang, Hongyan
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Series or journal
Scandinavian Journal of Economics
Part of the university bibliography
✅
Keyword
Capital Mobility
Inequality
Tax progression
Abstract
In this paper, we provide a two-country, two-class model of asymmetric capital tax competition. We show formally that poor people living in small countries can benefit from capital tax competition and therefore they are in favor of it. In order to benefit from capital inflow from larger countries, poor people in smaller countries accept less within-country income redistribution. As a consequence, between-country income inequality is increased by tax competition. © The editors of The Scandinavian Journal of Economics 2019.
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