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How socialization attenuates tax competition


Gilardi, Fabrizio; Wasserfallen, Fabio (2016). How socialization attenuates tax competition. British Journal of Political Science, 46(1):45-66.

Abstract

Tax competition is the quintessential example of policy interdependence. The general idea is that tax changes in one jurisdiction lead to similar changes in others. However, research has shown that institutional and political constraints limit competition. This article develops another argument: that socialization among policy makers attenuates competitive dynamics by setting limits to the extent of competition that is considered acceptable. Using fine-grained Swiss data and spatial econometric techniques, it shows that personal income tax rates are more strongly correlated among competitors that do not participate in the same intergovernmental organizations. This finding implies that, to some extent, the detrimental consequences of competition can be mitigated by fostering institutionalized forms of interaction among policy makers.

Abstract

Tax competition is the quintessential example of policy interdependence. The general idea is that tax changes in one jurisdiction lead to similar changes in others. However, research has shown that institutional and political constraints limit competition. This article develops another argument: that socialization among policy makers attenuates competitive dynamics by setting limits to the extent of competition that is considered acceptable. Using fine-grained Swiss data and spatial econometric techniques, it shows that personal income tax rates are more strongly correlated among competitors that do not participate in the same intergovernmental organizations. This finding implies that, to some extent, the detrimental consequences of competition can be mitigated by fostering institutionalized forms of interaction among policy makers.

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1 citation in Web of Science®
4 citations in Scopus®
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:06 Faculty of Arts > Institute of Political Science
Dewey Decimal Classification:320 Political science
Language:English
Date:January 2016
Deposited On:02 Dec 2016 07:12
Last Modified:03 Dec 2016 08:46
Publisher:Cambridge University Press
ISSN:0007-1234
Publisher DOI:https://doi.org/10.1017/S0007123414000246
Official URL:https://www.cambridge.org/core/services/aop-cambridge-core/content/view/756ADCAC039A6DB5F968EC7BFFB4F013/S0007123414000246a.pdf/how-socialization-attenuates-tax-competition.pdf
Related URLs:https://www.cambridge.org/core/journals/british-journal-of-political-science/article/how-socialization-attenuates-tax-competition/756ADCAC039A6DB5F968EC7BFFB4F013

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