Taxation under Economic Intergration

Working Papers 127 Hannu Piekkola

Abstract

The paper introduces international tax rules taking the mobile capital as the primary target of international tax policy. The famous Diamond-Mirrlees (1971) producting efficiency theorem holds under labor migration (and no unemployment) even though the tax on domestic fixed factor is arbitrary. Otherwise, source-based taxation works as a surrogate for exogenous wage taxes (rather than for taxes on domestic fixed factor) and international taxation is sensitive to country differences.

  • ISSN: 1236-7184
  • ISBN: 951-9282-95-5