The Consequences of Tax Competition on the Structure of Tax Revenue in Developed Countries

What is it about?

he paper examines the long run changes in the tax revenue structure in developed countries. We are particularly focused on the testing of a potential shift from taxation on mobile tax bases to less mobile ones, which could be seen as one of the results of rising tax competition. We assume that a decrease in corporate tax revenues is compensated by higher tax revenues from taxing work and property. Our dataset consist of panel date from 22 OECD countries within the period 1965 to 2012. We found empirical evidence for the long-run negative effect of corporate tax revenue on personal tax revenue as well as negative effect of corporate tax revenue on total revenue from indirect tax are.

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Why is it important?

Our results could have several important implications for the tax policies in developed countries.