Miltiadis Makris on Anticipated Capital Market Integration May Lead to a "Race to the Top"

Relatore: Miltiadis Makris - University of Southampton
Data e ora: lunedì 2 maggio 2011 alle ore 12.30 - Biblioteca DSE, Palazzina 32 ex caserma Passalacqua
Referente: Angelo Zago
Referente esterno
Data pubblicazione: 15 novembre 2010
Dipartimento: Scienze Economiche

Riassunto

We investigate non-cooperative capital taxes when it is rationally
anticipated that capital will be mobile across tax jurisdictions in
the future. This problem has not been investigated before in spite
of its importance and relevance for emerging economies and the
ongoing economic integration in Europe and elsewhere. Our study
emphasizes that capital taxes that are levied prior to capital
market integration (CMI) taking place affect, among others, capital
stocks and tax revenues in other tax jurisdictions after CMI has
occurred. This gives rise to an intertemporal tax externality, which
may lead, ceteris paribus, to too high non-cooperative capital taxes
prior to CMI. This neglected intertemporal externality arises from
the effects of capital taxes on private income and, thereby, on
savings and aggregate supply of capital over time, for any given
path of net real interest rates and future incomes. Our study could
contribute to the further understanding of capital taxes in the last
few decades when there has been an ongoing process of CMI worldwide.