Discussion Papers 2016
CIRJE-F-1012 | "Demographics and Tax Competition in Political Economy" |
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Author Name | Morita, Tadashi, Yasuhiro Sato and Kazuhiro Yamamoto |
Date | May 2016 |
Full Paper | |
Remarks | Subsequently published in International Tax and Public Finance 27, 865-889 (2020). |
Abstract |
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We examine possible impacts of demographics on outcomes of capital tax competition in political economy. For this purpose, we develop an overlapping generations model wherein public good provision financed by capital tax is determined by majority voting. When a population is growing, younger people represent the majority, whereas when a population is decreasing, older people represent the majority. We show that the race to the bottom is likely to emerge in the population growing economy whereas the race to the top might emerge in the population decreasing economy. |
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