This paper studies the interplay between two groups of countries, large and small, which compete sequentially on corporate taxes and environmental regulations to attract imperfectly mobile firms. We show that in general, the small countries undercut the large countries in terms of corporate taxes. The small countries choose to be both tax and pollution havens when they are less concerned about the environment than the large countries are and capital integration is low. The large countries never act as both tax havens and pollution havens. Finally, we find that higher firm mobility narrows the tax gap between the large and the small countries but does not affect the optimal environmental policy: tax competition immunizes countries against the detrimental effect of globalization on emission caps.

Tax haven, pollution haven or both / Thierry, M.; Tarola, O.; Taugordeau, E.. - In: INTERNATIONAL TAX AND PUBLIC FINANCE. - ISSN 1573-6970. - (2022).

Tax haven, pollution haven or both

M. Thierry;O. Tarola;
2022

Abstract

This paper studies the interplay between two groups of countries, large and small, which compete sequentially on corporate taxes and environmental regulations to attract imperfectly mobile firms. We show that in general, the small countries undercut the large countries in terms of corporate taxes. The small countries choose to be both tax and pollution havens when they are less concerned about the environment than the large countries are and capital integration is low. The large countries never act as both tax havens and pollution havens. Finally, we find that higher firm mobility narrows the tax gap between the large and the small countries but does not affect the optimal environmental policy: tax competition immunizes countries against the detrimental effect of globalization on emission caps.
2022
Tax competition · Capital integration · Cross-border pollution · Environmental regulation
01 Pubblicazione su rivista::01a Articolo in rivista
Tax haven, pollution haven or both / Thierry, M.; Tarola, O.; Taugordeau, E.. - In: INTERNATIONAL TAX AND PUBLIC FINANCE. - ISSN 1573-6970. - (2022).
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/1670004
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