Aspects of tax spillovers: is there a "worldwide" tax burden?

The objective of this book is to develop a model to examine the concept of a worldwide tax burden. Using versions of the famous general equilibrium model first developed by Prof Harberger in 1962, we analyze the extent of tax spillovers in the presence of and without a public input in an open economy setting. We model two different taxes, the Capital Income Tax and a Consumption Tax and two different types of expenditure patterns, a government input and a transfer payment. The book answers the following research questions (1) Can the extent of tax spillovers be quantified using a general equilibrium model that is not dependent on functional forms? (2) Does the extent of spillovers depend on the type of tax used? (3) Does the extent of spillovers depend on the use to which the taxes are put? (4) What are the policy implications? We find that the tax cutting economy can gain from cutting a distorting tax only when the expenditure pattern is neutral, while imposing a cost to the rest of the world in terms of sources and uses of GDP. When revenues are used to provide productive public goods; neither country gains from tax cuts that lower inputs.

Autorentext

Sandeep is a visiting assistant professor at Duke University's Sanford School of Public Policy. He obtained his PhD in economics in 2010, prior to which he worked for several years including 9 years with the Indian Revenue Service (Customs & Excise). Sandeep works with the Public Finance Group at the Duke Center for International Development.