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Home > Terms > Armenian (HY) > հարկային մրցակցություն
հարկային մրցակցություն
Low-tax policies pursued by some countries in the hope of attracting international businesses and capital. Economists usually favor competition in any form. But some say that tax competition is often a beggar-thy-neighbor policy, which can reduce another country’s tax base, or force it to change its mix of taxes, or stop it taxing in the way it would like. Economists who favor tax competition often cite a 1956 article by Charles Tiebout (1924–68) entitled "A Pure Theory of Local Expenditures". In it he argued that, faced with a choice of different combinations of tax and government services, taxpayers will choose to locate where they get closest to the mixture they want. Variations in tax rates among different countries are good, because they give taxpayers more choice and thus more chance of being satisfied. This also puts pressure on governments to be efficient. Thus measures to harmonize taxes are a bad idea. There is at least one big caveat to this theory. Tiebout assumed, crucially, that taxpayers are highly mobile and able to move to wherever their preferred combination of taxes and benefits is on offer. But many taxpayers, including the great majority of workers, are not able to move easily. Tax competition may make it harder to redistribute from rich to poor through the tax system by allowing the rich to move to where taxes are not redistributive.
- Part of Speech: noun
- Synonym(s):
- Blossary:
- Industry/Domain: Economy
- Category: Economics
- Company: The Economist
- Product:
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