International Tax and Public Finance

, Volume 13, Issue 2–3, pp 151–161 | Cite as

A Note on Intertemporal Fiscal Competition and Redistribution



This paper studies fiscal competition among jurisdictions in a dynamic framework, where the degree of mobility of private capital across jurisdictions boundaries is perfect. The optimal tax on mobile capital is a source tax that taxes away factor rents. Further we show that taxation of mobile capital can redistribute income in favor of the immobile factor labor. This is because the factor rents generated by public inputs and appropriated by mobile capital exceed the efficient level of public expenditure for investments.


fiscal competition tax competition public inputs source tax capital taxation capital mobility 


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Copyright information

© Springer Science + Business Media, Inc. 2006

Authors and Affiliations

  1. 1.Center of Public FinanceUniversity of FribourgFribourgSwitzerland

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