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The European Union and Beyond

Mapping Potential Winners and Losers from Global Tax Competition

Laura Seelkopf
Universität Bremen
Hanna Lierse
Jacobs University Bremen
Philipp Genschel
BIGSSS, Bremen
Laura Seelkopf
Universität Bremen

Theoretical and normative models on tax competition are extensive. Yet, the empirical focus remains mostly restricted to the OECD world. However, tax competition is a global process, in which rich, established democracies do not only compete with each other for international capital. Processes and outcomes of tax competition reach far beyond the boundaries of these states. International tax havens, newly emerging, and developing economies remain largely ignored in the debate, although they are often heavily affected. In this paper, we shed light on global patterns of tax competition by first, taking stock of the literature on tax competition and diffusion outside the OECD. Second, based on time-series-cross-sectional-data on tax rates and revenues we map global tax trends and identify country clusters. Third, we shed light on the possible effects of international tax competition on policy-making in different country clusters. While large, badly governed developing countries suffer most heavily from international tax competition, small, well-governed states and their citizens are potential beneficiaries.
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