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Tax Interactions with Asymmetric Information and Nonlinear Instruments

Abstract : When different layers of government exert their taxing power upon a common base, the decisions made by one tier affect the receipts that the other policymakers can collect. Likewise, when same level authorities derive their receipts from a mobile tax base, a competition mechanism takes place that triggers externalities. This paper proposes a model where both horizontal and vertical interactions take place. Uncertainty concerning the base, that is, the amount of capital likely to be invested, is introduced and a generalization of taxation schemes is provided through the choice of the instruments, in order to assess the robustness of traditional analyses results in a more general and realistic scheme. With respect to a unique government framework, an excessively high level of taxation emerges from the simultaneous interplay of horizontal and vertical tax externalities.
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Preprints, Working Papers, ...
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https://hal-univ-pau.archives-ouvertes.fr/hal-03551027
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Submitted on : Tuesday, February 1, 2022 - 1:58:08 PM
Last modification on : Monday, February 14, 2022 - 12:40:02 PM
Long-term archiving on: : Tuesday, May 3, 2022 - 8:44:03 AM

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  • HAL Id : hal-03551027, version 1

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Florence Lachet-Touya. Tax Interactions with Asymmetric Information and Nonlinear Instruments. 2009. ⟨hal-03551027⟩

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