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| Volume 6, No. 1,
April 2007 |
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The
Impact of Trade and Factor Flows on Domestic Taxation |
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| Ryo Takashima |
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Department of Economics,
Washington & Jefferson College, U.S.A. |
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| Abstract |
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Previous empirical
literature has looked at the effect of trade on capital and labor
tax rates or the effect of labor flow on the labor tax rate.
However, the theoretical literature suggests that both trade and
factor flows can affect capital and labor tax rates simultaneously.
This paper presents an empirical analysis of how domestic taxation
is affected by economic integration. We find no evidence that trade
and capital flows alter capital and labor tax rates. Rather, we find
that increasing economic integration leads to a lower consumption
tax. |
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Key words: economic
integration; effective average tax rate; migration;
capital flow |
| JEL
classification: H2; F15; F2 |
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