Optimal Tax/Expenditure Competition Strategy of Governments in the Presence of Time Inconsistency The Case for Investment Tax Abacemencs
Businesses which seek the location that offers the highest profitability are likely to consider tax incentives and the level of government services available. However, once a business commits itself to a locality, high moving costs render it vulnerable to future tax increases or denial of government...
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| Format: | eBook |
| Language: | English |
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Washington, D.C.
International Monetary Fund
1990
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| Series: | IMF Working Papers
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| Collection: | International Monetary Fund - Collection details see MPG.ReNa |
| Summary: | Businesses which seek the location that offers the highest profitability are likely to consider tax incentives and the level of government services available. However, once a business commits itself to a locality, high moving costs render it vulnerable to future tax increases or denial of government services. Fear of time inconsistency will lower expected business profitability in a region. This paper indicates that a developing country or locality can attract a higher level of capital with a tax abatement scheme which provides a subsidy (funded by a capital income tax) equivalent to moving/setup costs |
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| Physical Description: | 20 pages |
| ISBN: | 9781451965636 |