چکیده:
The theory of international tax competition suggests that governments attempt to attract mobile capital bases by undercutting the foreign capital tax rate. An analysis of the role that state capacity plays in tax policymaking under international pressures is، however، missing. The central contribution of our study is to highlight the importance of the interaction between state capacity and capital mobility. It is the purpose of this article to show whether state capacity increases capital tax rates in a way that tax competition under high capital mobility dampens. Our analysis of 20 OECD countries over the period of 1966-2000 suggests that the increase in capital tax rates as a result of higher state capacity is smaller when capital mobility is high.
خلاصه ماشینی:
Our analysis of 20 OECD countries over the period of 1966-2000 suggests that the increase in capital tax rates as a result of higher state capacity is smaller when capital mobility is high.
Regarding the effect of state capacity, we argue that the efficiency and performance of a government to mobilize and extract resource from its population are as important as other economic factors that have been widely acknowledged in the literature, such as the size of capital endowment (Hays, 2003) and the distribution of tax bases (Bucovetsky, 1991).
More specifically, our argument is that the bureaucratic and administrative capacity allows states to raise capital tax rates, but competition under high mobility limits this ability.
While politico-economic constraints on the outcome of tax competition have been the focus of much debate in the comparative political economy literature (Swank, 1998, 2002; Garrett and Mitchell, 2001; Swank and Steinmo, 2002; Hays, 2003; Basinger and Hallerberg, 2004; Franzese and Hays, 2008; Pluemper et al.
Although most political economists studying the strategic effects of tax competition have generally ignored the importance of state capacity, influential works such as Campbell (1993), Cheibub (1998), Acemoglu (2005, 2006), and Besley and Persson (2010) argue that strong state capacity helps governments to extract revenues from the economy through tax policies.
Relative state capacity - as an indicator of the relative strength of the state to mobilize resources from its population- has been used in several studies of environmental policies (Janicke, 1997; Herbst, 2000; Van de Walle, 2001; Ehrhardt-Martinez, 2002; Schwartz, 2003; Ward et al.