Is Tax Competition Harmful?
One of the benefits of globalization is that it is bringing economies closer together. As trade and investment barriers fall, investors are able to take advantage of an ever increasing number of investment opportunities. That sounds like good news, doesn’t it? The problem with this scenario, if you are one of the bloated, high-tax Western European welfare states, is that you are witnessing an exodus of investment capital to jurisdictions that are more tax friendly. Corporations that are headquartered in one of these high tax countries are increasingly exercising their options to invest elsewhere. The result is a loss of jobs and tax revenue to the high tax jurisdictions and an influx of capital, jobs and economic growth to the countries that offer lower corporate tax rates.
KeywordsWelfare State Investment Barrier Private Business People
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