The Laffer curve is often used to analyze revenue-maximizing tax pressure and to provide normative suggestions to policymakers. We suggest that although the Laffer curve provides valuable insights, revenue maximization is not the only factor guiding policymakers’ decisions in regard to the suitable tax pressure. Thus, we try to broaden the spectrum by replacing the Laffer curve with a different graphical instrument, which takes into account three key variables: the quality of public expenditure, ideology (the role of populism) and rent-seeking. By means of this new graphical instrument, we derive results that shed light on the nature of the equilibria various countries can hope to obtain, as well as on the features of the imbalances. We then extend our insights to an open-economy contest featuring tax competition. In particular, we assess when tax competition is relevant, and we investigate whether the proposed remedy–tax harmonization–is credible. It is argued that tax harmonization is inferior to cooperation and that it is in fact an intermediate step on the way towards tax centralization.
The Review of Austrian Economics – Springer Journals
Published: Nov 19, 2013
It’s your single place to instantly
discover and read the research
that matters to you.
Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.
All for just $49/month
Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly
Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.
Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.
Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.
All the latest content is available, no embargo periods.
“Hi guys, I cannot tell you how much I love this resource. Incredible. I really believe you've hit the nail on the head with this site in regards to solving the research-purchase issue.”Daniel C.
“Whoa! It’s like Spotify but for academic articles.”@Phil_Robichaud
“I must say, @deepdyve is a fabulous solution to the independent researcher's problem of #access to #information.”@deepthiw
“My last article couldn't be possible without the platform @deepdyve that makes journal papers cheaper.”@JoseServera