American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Pareto-Efficient International Taxation
American Economic Review
vol. 94,
no. 1, March 2004
(pp. 259–275)
Abstract
This paper analyzes Pareto-efficient international tax regimes. Because every country faces its own national budget constraint, the Diamond-Mirrlees production-efficiency theorem, which underlies key tenets of policy advice in international taxation - the desirability of destination basis for commodity taxation, of the residence principle for capital income taxation, and of free trade - does not apply. The paper establishes conditions - relating to the availability of explicit or implicit devices for reallocating tax revenues across countries - under which production efficiency is nevertheless desirable, and characterizes the precise ways in which Pareto-efficient international taxation may require violation of established tenets.Citation
Keen, Michael, and David Wildasin. 2004. "Pareto-Efficient International Taxation." American Economic Review, 94 (1): 259–275. DOI: 10.1257/000282804322970797JEL Classification
- H21 Taxation and Subsidies: Efficiency; Optimal Taxation
- H87 International Fiscal Issues; International Public Goods