Thursday, August 23, 2007


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.

Selected reading:
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)

No comments: