This paper investigates whether tax competition can survive under tax coordination, when information is private or nonverifiable. We focus on a two-jurisdiction model where capital can move across jurisdictions, and where the two jurisdictions have different public good requirements, but are otherwise identical. In this setting, coordination may call for a second-best allocation supported by differentiated tax rates for the two jurisdictions. If, however, information on jurisdiction types is private, such a second-best allocation may not be implementable. We show that the presence of private information will generally affect not only the choice of coordinated rates in states where jurisdictions are different, but also the choice of harmonized rates in states where jurisdictions have identical public good requirements
Authors
Research Associate University of Nottingham
Kim is Professor of Economics and Public Policy and Head of the School of Economics at the University of Nottingham.
Perroni, Perroni
Amrita Dhillon
Working Paper details
- DOI
- 10.1920/wp.ifs.1997.9712
- Publisher
- IFS
Suggested citation
A, Dhillon and P, Perroni and K, Scharf. (1997). Implementing tax co-ordination. London: IFS. Available at: https://ifs.org.uk/publications/implementing-tax-co-ordination (accessed: 10 May 2024).
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