Suchergebnisse

Corporate tax levels have fallen substantially in Europe during the last decades. A broad literature has identified tax competition as one reason for this decline in corporate tax levels. However, none of these studies explicitly asks the question whether tax competition within regions is different from tax competition across regions, e.g. due to global regionalism of foreign direct investments. This is a crucial question to answer in order to discuss the desirability of tax harmonization in a distinct region, for example, within the European Union. Therefore, the study aims to give hints on the question whether the decline in corporate tax levels in Europe is mainly driven by tax competition between EU member states or by pressure from other world regions. The results of this study, which makes use of tax reaction functions, indicate that there is evidence for tax competition within Europe, whereas there is no robust evidence that European countries compete with countries from other world regions.

Corporate tax levels have fallen substantially in Europe during the last decades. There is a broad literature on tax competition which has been identified as one reason for the decline in corporate tax levels. However, none of these studies explicitly ask the question whether tax competition within regions is di erent from tax competition across regions, e.g. due to "global regionalism" of foreign direct investments. This is a crucial question to answer in order to discuss the desirability of (local) tax harmonization, for example, within the European Union. Therefore, the study aims to give hints on the following questions: Is the decline in corporate tax levels in Europe mainly driven by inner-European tax competition? Or is it (also) due to pressure from other world regions? The results of this study which makes use of tax reaction functions (spatial econometrics) indicate that there is evidence for tax competition within Europe (with respect to effective average tax rates) whereas there is no evidence that European countries compete with countries from other regions.

A sizeable literature studies whether governments strategically interact with each other through policy-diffusion, learning, fiscal and yardstick competition. This paper asks whether, in the presence of direct democratic institutions, spatial interactions additionally result from voters' direct actions. The proposed mechanism is that the voters' actions in vetoing a decision or inaugurating a preferred policy by a binding initiative in their jurisdiction can potentially have spillover effects on the actions of voters and special interest groups of neighboring jurisdictions. Utilizing data on around 1,800 voter-petitions across over 12,000 German municipalities in 2002-09, we find that a jurisdiction's probability of hosting a petition is positively driven by the neighbors' direct democratic activity. These effects are persistent, and are stronger for more visible instruments of direct democracy. The interactions are also mostly driven by petitions in same or similar policy areas, and are stronger in towns with relatively more per capita newspapers.

The European Court of Justice (ECJ) has become an influential player in the field of direct taxation in the European Union in the past twenty years. However, it is unclear whether the ECJ's decisions actually increase tax neutrality and therefore contribute to the achievement of an internal market as stipulated by the European treaties or not. In 2006, the ECJ limited the applicability of specific tax rules in Europe that are intended to prohibit the excessive use of low-tax countries. Our counterfactual scenarios show that this restriction of so-called controlled foreign company (CFC) rules and the related emergence of IP boxes cast doubt on the positive effects the ECJ is assumed to have. Additionally, we show that the abolishment of IP boxes would strengthen tax neutrality in Europe. Overall, further research is needed to relate and harmonise economic and legal concepts of tax neutrality.

A sizeable literature studies whether governments strategically interact with each other through policy-diffusion, learning, fiscal and yardstick competition. This paper asks whether, in the presence of direct democratic institutions, spatial interactions additionally result from voters' direct actions. The proposed mechanism is that the voters' actions in vetoing a decision or inaugurating a preferred policy by a binding initiative in their jurisdiction can potentially have spillover effects on the actions of voters and special interest groups of neighboring jurisdictions. Utilizing data on around 1,800 voter-petitions across over 12,000 German municipalities in 2002-09, we find that a jurisdiction's probability of hosting a petition is positively driven by the neighbors' direct democratic activity. These effects are persistent, and are stronger for more visible instruments of direct democracy. The interactions are also mostly driven by petitions in same or similiar policy areas, and are stronger in towns with relatively more per capita newspapers.

Fiscal rules have become popular to limit deficits and high debt burdens in industrialized countries. A growing literature examines their impact based on aggregate fiscal performance. So far, no evidence exists on how fiscal rules influence deficit expectations of fiscal policy makers. In the context of the German debt brake, we study this expectation dimension. In a first step, we introduce a simple dynamic model in an environment characterized by the lagged implementation of a new rule. Lagged implementation characterizes the setup of the German debt brake and raises credibility issues. In a second step, we analyze a unique survey of members of all 16 German state parliaments and show that the debt brake's credibility is far from perfect. The heterogeneity of compliance expectations in the survey closely corresponds to our theoretical predictions regarding states' initial fiscal conditions, specific state fiscal rules and bailout perceptions. In addition, there is a robust asymmetry in compliance expectations between insiders and outsiders (both for in-state vs out-of-state politicians and the government vs opposition dimension), which we attribute to overconfidence rather than noisy information. These results suggest that national fiscal rules can be strengthened through nobailout rules, sustainable initial fiscal conditions and complementary sub-national rules.

The present paper analyzes expectations of German politicians about the German debt brake (Schuldenbremse), which became part of the German constitution in 2009. This fiscal rule requires the federal government and the German states to run a (cyclically adjusted) budget deficit of no more than 0.35% of GDP starting in 2016 and zero % starting in 2020, respectively. We use unique survey data from more than 630 politicians at the state level to systematically study the subjective beliefs in the compli-ance and desirability of the debt brake. We find that i) state politicians who belong to the coalition parties of the current federal government coalition believe more strongly in federal government compliance, ii) state politicians who belong to the party of the current state government believe more strongly in the own state s compliance, iii) worse state fiscal conditions and stronger beliefs in lack of credible enforcement of the debt brake lower the perceived likelihood of compliance, iv) there often is a large discrepancy in the assessed probability of compliance between politicians from the own state vs. politicians from other states, v) beliefs into the consequences of non-compliance with the debt brake are quite heterogeneous, and vi) politicians often find the debt brake more desirable than probable.