Economic Globalization, International Tax Competition Theory And Practice

Economic Globalization is changing the international tax environment and the international tax relationship. Particularly,international mobile capital is making the national tax base more fragile than ever,thereby promoting the motivation of the nation competing for mobile capital by lowering tax rates and offering tax incentives. These practices are so called "International Tax Competition". Economic Globalization is making the national tax policies more interdependent,which implies that many national policies come to have spillover effects beyond countries borders. Hence,the externality caused by international tax competition is really a concern in the international society. In recent years,lots of research on international tax competition have been made by foreign scholars,and these research achievements contribute to shape an important theoretical branch of Public Economics. However,the research on related theories in China is still at initial stage. The dissertation aims at:(i) presenting and appraising the practices and theories of foreign international tax competition;(ii) analyzing the effects of international tax competition;(iii) analyzing international tax competition in the frame of the Optimal Taxation Theory;(iv) exploring the possibility and feasible ways of international tax harmonization;(v ) puting forward suggestions on China's strategy of international tax competition.There are six chapters in this dissertation as following:Chapter 1:"A Political Economics Consideration on Economic Globalization and International Tax Competition." Being the starting point,this chapter introduces the definition,features and contents of economic globalization. Based on the analysis of economic globalization,the author then makes inquiry into the international tax relationship and international tax competition in the frame of Political Economics. This chapter draws some useful conclusions which are the theoretical guidance of the dissertation:Tax policy is still an important available instrument for national governments even in the process of economic globalization. However,economic globalization comes to challenge the national tax sovereign and also imposes constraints on the using national tax policy independently. Hence,the conflict between sovereign and harmonization is the theme of the international tax relationship. From this point of view,a dialectical methodology should be employed in the study of international tax competition.Chapter 2:"The Effect Analysis on International Tax Competition." In this chapter,some equity and efficiency considerations of international tax competition is presented. Three effects of international tax competition are analyzed:the location decision of FDI,the provision of public goods and the tax burden distribution betweenfactors. The key conclusions of this chapter are:(i) tax is a determinant of FD1. To a certain extent,the tax incentives could be considered as a remedy for the defects of domestic market,and the rational using of tax competition could improve the welfare of domestic residents. However,excessive tax competition may weaken the effectiveness of the tax incentives,hence incuring welfare loss;( ii) in a non-cooperation tax competition equilibrium,it turns out that tax rates are set too low to fiance an efficient level of public expenditure,especially lowers the provision of the public goods benefiting residents;(iii) competition for capital means the revenue from capital income taxation declines. In order to maintain the necessary public expenditure,the government would shift tax burden towards the more immobile labor,which may arouse the inequity issues on redistribution.Chapter 3:"The Strategy of International Tax Competition and Optimal Capital Taxation." In this chapter,the optimal capital taxation under strategic international tax competition is analyzed in a combined frame of the optimal taxation theory and international tax competition theory. The author makes a comparative study of three separate research strands of the optimal capital t...