Tuesday, May 29, 2007

Increased European Tax Competition

Corporate income taxes are now being reduced in the large European economies following earlier more dramatic tax cuts in for example Ireland and most Eastern European countries.

Because of the higher mobility of corporate investors, the corporate income tax have a much higher negative effect on the tax base than most other taxes, which is why it is now lower than most other taxes.

Corporate income tax cuts look unlikely in some countries, like America, Japan and Sweden, even though particularly America and Japan have much higher taxes than most European countries. In Sweden the government is too anxious not to be seen as delivering give aways to the rich, so after the abolition of the wealth tax it doesn't dare go any further. In America, the concern is similarly that it will further increase inequality.


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