Distributional consequences of capital tax coordination

Publikation: Working/Discussion PaperWU Working Paper

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Abstract

This paper has two ambitions. First, we review the economic literature on tax coordination. Second, we argue that the taxation of capital is not an issue of efficiency, but instead an issue of equity. In particular, capital tax coordination can alter the vertical distribution of income between the production factors capital and labour. Capital is in perfectly elastic supply in a small open economy. Therefore the tax incidence falls to the immobile factor, labour. By contrast, capital is in inelastic supply at the international level, and therefore the capital tax incidence falls completely on capital, without welfare losses of taxation. (author's abstract)
OriginalspracheEnglisch
ErscheinungsortVienna
HerausgeberSFB International Tax Coordination, WU Vienna University of Economics and Business
DOIs
PublikationsstatusVeröffentlicht - 2005

Publikationsreihe

ReiheDiscussion Papers SFB International Tax Coordination
Nummer6

WU Working Paper Reihe

  • Discussion Papers SFB International Tax Coordination

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