International tax competition occurs when individuals and firms can reduce tax burden by shifting the supply of labor and capital from high-tax destination to low-tax jurisdiction. Fiscal rivalry encourages individuals and companies to move to the destination that penalizes effort and entrepreneurship less than high-tax jursidictions, leading to greater efficiency in work, savings and investment. Low tax burden, perceived as a percentage of the GDP, enhances economic performance and competitive pressures significantly improve the allocation of productive resources and thus promote efficiency and generate higher standard of living.
Bermuda 'A Top Five Financial Centre, Tax-news, London 02 May 2007 (link)
Daniel Mitchell: The Economics of Tax Competition: Harmonization vs. Liberalization, 2004 (link)
Richard Teather: The Benefits of Tax Competition, 2005 (link)