Bulletin n. 1/2006
May 2006
CONTENTS
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
    • Halkos G., Kyriazis N.
    Is tax competition harmful and is the EU an optimal tax area?
    in European Journal of Law and Economics , Volume 21, Number 2 ,  2006 ,  163-177
    This paper examines the issue of harmfulness of tax competition commenting on issues like welfare, growth, redistribution, harmonization and individual freedom. A simple game theoretical ap proach is formulated, where for the first time the two players start from unequal initial conditions, thus influencing strategy and outcomes. Next we propose the new criterion of Optimal Tax Area under which the possibility and feasibility of tax harmonization is examined. The policy implication of our paper is that we do not expect harmonization for direct taxes like corporate taxes in the EU in the near future and if so, harmonization of corporate tax rates on low levels. We conclude that both more theoretic research and empirical evidence are needed before we can answer with certainty whether tax competition is harmful or not.
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