Tax Evasion, Tax Competition And The Gains From Nondiscrimination: The Case Of Interest Taxation In Europe  

Oleh:

Janeba, Eckhard ; Peters, Wolfgang

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 109 no. 452 (Jan. 1999), page 93-101.
Fulltext: 93.pdf (211.06KB)

Isi artikel

This paper uses a game±theoretic approach to analyse the taxation of interest income in Europe in the presence of tax evasion. The model allows us to assess the success of various reform proposals. We argue that the tax treatment of nonresidents' interest income plays a crucial role. When decisions on discrimination and on withholding tax rates are made noncooperatively, the outcome is similar to a prisoners' dilemma. All countries discriminate, but in equilibrium internationally mobile portfolio capital evades taxation successfully. In contrast, if all governments did not discriminate, tax competition leads to less tax evasion.

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