Diplomová práce Ondřej Martínek Abstract Tax havens are thorn in the eye of the OECD countries, nonetheless they emerged originally on europian soil and on the ruins of british empire. Classical accusation argues, the tax havens are supposed to earn on luring foreign capital that is enabled to evade taxation and by that they breach the balance of national budgets and tax justice in developed countries, enwiden social imbalance and speed up global tax competition. There are many forms of tax avoidance via tax havens: transfer pricing, holding structures, trusts, foundations or offshore business. Although many of these forms remain illegal, for certain other ones the states are the ones responsible for - e.g. generous web of double tax treaties. Global shortage to national budgets is estimated at around 3% of total revenues. Tax competition exists and global tax rates are in fact decreasing, however national tax revenues are, in absolute terms, rising. Because of this ambiguous effect on global economy and near impossibility to distinguish "real" tax havens, the developed countries are choosing rather careful policy to the tax havens and concentrate on negotiations and concluding TIEA's.

In the present dissertation, we study tax competitions for foreign direct investment, which includes the study of greenfield investment with the firm's ownership problem and the cross-border merger and acquisition (M\&A). It sheds light on the literature of public finance, international economics, and industrial organization. In chapter 1, we develop an open economy model with two segmented countries and one monopoly firm which registered in one of the countries. Our results show that when there is an exogenous transportation cost when exporting, the market size plays an important role in tax competition, however, when there is an endogenous tariff determined optimally by each country, the market size does not matter in the tax competition. Chapter 2 and 3 study the tax competition for a post-cross-border merger and acquisition firm, which the firm has three location options, located in either of the countries or both. We found that when the governments have two tax instruments, the lump-sum tax and tariff, the market size and price policy play an important role in tax competition. Moreover, when the governments utilize the lump-sum tax as the only instrument for tax competition, both the firm and countries will be better off when the firm keeps both plants.

No Brasil, o ponto de vista de que a competição tributária (sempre retratada como "guerra fiscal") é algo conflituoso faz com que seja difundida uma visão negativa sobre um fenômeno que nem sempre é visto como tal na literatura econômica internacional. Muitos economistas veem essa competição como algo que, sendo capaz de coibir o comportamento rent-seeking por parte dos governantes, seria benéfico para a sociedade. Com base nessa ideia, usando o modelo de Eggert e Sorensen (2008), foi testado se variáveis proxy relativas à intensidade da competição tributária e ao comportamento rent-seeking de políticos no poder eram correlacionadas. Usou-se dados dos 26 estados brasileiros e do Distrito Federal para os anos de 2001 a 2009. Os resultados mostraram que, embora essas variáveis proxy não fossem correlacionadas para os níveis de escolaridade mais baixos, no nível mais alto, havia correlação entre essas duas variáveis, embora ela fosse positiva, o que rejeitava a hipótese de que uma maior competição tributária seria capaz de diminuir o comportamento rent-seeking dos políticos. / In Brazil, the point of view that tax competition (commonly referred to as a “fiscal war”) is something conflictive spreads a negative perspective on a phenomenon that is not always seen as such in the international economic literature. Many economists see this competition as something that, in being able to reduce rent-seeking behavior by politicians, would be beneficial to society. Stemming from this idea, and using the model from Eggert and Sorensen (2008), it was tested if proxy variables relating to the intensity of tax competition and to the rent-seeking behavior of politicians in office were correlated. Data from all the 26 Brazilian states and also Distrito Federal, from 2001 to 2009, were used. The results showed that, although the proxy variables were not correlated for the less skilled groups of workers considered, at the high skilled group, there was correlation between the two variables, but it was positive, which rejected the hypothesis that a more intense tax competition would be able to repress rent-seeking behavior by politicians.

This thesis "Tax competition in the European Union" (hereinafter as "EU") analysis issues of different tax systems in the European Union and aspects relevant to their harmonization and existent competition advantages. The study aims to focus on the fact that tax systems within the EU arise from various and different historical setups and practice different approaches to particular kinds of income. These differences comply with various economical environments in particular EU countries and these are structured to fit specific needs of particular countries and furthermore to enable easy access of local residents to international business transactions and to international corporate structures. The study's aim is not accurate and precise analysis of particular systems and this even doesn't intend to present a quantitative comparison. The thesis describes various aspects of taxation in particular countries even with respect to EU legislation influence and it opens up disputation about expediency or harmfulness of tax competition in the EU. The thesis also describes beginning trends to convert needed and useful tax harmonization into full unification of tax systems in EU and actual shift of the tax and fiscal policy onto the central level of EU.

My dissertation examines the question of how foreign direct investment (FDI) affects social welfare spending across countries. To date, there have been three important challenges to studies of the globalization-welfare state nexus. First, most scholars understand market internationalization in terms of the trade of goods and services while minimizing how other aspects of globalization fit into this discussion. Second, scholarly attention to economic globalization has been mistaken when understanding the relationship between demand- and supply-side mechanisms for social welfare provision. Thus, the argument that trade stimulates demand for social welfare has been incorrectly used to oppose the argument that capital mobility significantly undercuts a government's capability to fund welfare states. Lastly, existing studies on this topic mostly center around affluent democracies; various theories of welfare states require further elaborations to increase their external validity. My dissertation aims to overcome these challenges. For this purpose, I focus on one of the most important aspects of globalization, FDI, which bears meaningful implications for both demand- and supply-side functions of social welfare provisions when explaining variations of social welfare spending across countries. I argue that since the late twentieth century, FDI has been a major cause of the "globalization dilemma,'' proposed by (Rodrik1997), who argues that in an age of globalization governments face increased demand for social welfare and decreased capabilities to supply it. In other words, FDI has conflicting influences on welfare states. On the one hand, FDI works for welfare states as the ensuing economic insecurity increases demand for social welfare. At the same time, however, FDI works against welfare states because governments will experience reductions in capital taxation due to competition among themselves to attract and retain production capitals. I further argue that there is an interesting consequence of this dilemma. Due to the conflicting influences of FDI on welfare states, the expansion of social welfare provisions requires governments to secure additional revenues. Governments will address this concern through a strategy that is both effective and politically less expensive: an increased reliance on indirect taxation. As indirect taxes are mostly born out of labor and thus notoriously regressive, the very effort to supply social welfare provisions goes against the fundamental principle of welfare states: the redistribution of income from the rich to the poor.

L’ancrage historique du territoire dans la construction de l’État fait que le pouvoir d’imposition soit fondé sur une approche territoriale garantissant la pérennité et la cohésion du territoire national malgré l’évolution de l’économie vers un modèle qui se détache de l’espace géographique. La confrontation entre un droit fiscal initialement en adéquation avec le territoire politique et une réalité économique mondialisée et de plus en plus numérisée entraine une recomposition du territoire vers de multiples territoires plus adaptés à cette réalité. Le lien assez étroit entre la formation des territoires fiscaux et la construction fiscale normative, donne à la notion classique du territoire un contenu nouveau adapté à la particularité de la matière fiscale et harmonisé avec la réalité économique par l’expansion de solutions juridiques rénovées. Le territoire en droit fiscal, concrétisé par l’exercice de la compétence fiscale, peu importe le cadre spatial dans lequel s’exerce cette compétence, est plus une construction qui s’adapte, qu’une terre avec des frontières qui le déterminent. Il se transforme en une notion fonctionnelle, il est tantôt un déterminant de rattachement de la valeur imposable, tantôt un outil de politique publique. Cette perception fonctionnelle entraine un remodelage du territoire qui s’enrichit en gardant le rattachement étatique. / The historic anchoring of the territory in the construction of the State makes that the power of taxation is based on a territorial approach guaranteeing the durability and the cohesion of the national territory despite the evolution of the economy towards a model which is detached from the geographical space. The confrontation between a tax law initially in adequation with the political territory and a globalized and increasingly digitalised economic reality leads to a recomposition of the territory towards multiple territories more adapted to this reality. The rather close link between the formation of fiscal territories and the normative tax construction gives to the classical notion of the territory a new content adapted to the peculiarity of the tax matter and harmonized with the economic reality by the expansion of renovated legal solutions. The territory in tax law, concretized by the exercise of fiscal jurisdiction, regardless of the spatial framework in which this competence is exercised, is more a construction that adapts, than a land with borders that determine it. It is transformed into a functional notion, it is sometimes a determinant of attachment of the taxable value, sometimes a tool of public policy. This functional perception leads to a remodeling of the territory which is enriched by keeping the state connection.

Le thème général exploré dans cette recherche doctorale est "la Concurrence et la Convergence Fiscales". Examiner les concepts de concurrence et convergence fiscales d'une manière intégrée constitue un objectif important en soi. Cela permet, jusqu'à un certain point, d'apporter une vision innovatrice au problème étudié. Jusqu'ici, la littérature sur la concurrence fiscale ne suggère pas que les taux d'imposition convergent dans l'une ou l'autre direction. Les résultats principaux d'un modèle de concurrence fiscale classique avec des pays symétriques sont que, 1- la mobilité du capital induit un taux d'imposition trop bas par rapport à l'optimum social ; 2- il existe une corrélation négative entre la mobilité du capital et le taux d'imposition sur le capital ; 3- une harmonisation vers le haut des taux d'imposition des capitaux peut produire une amélioration au sens de Pareto. Bien que ces trois points représentent une vision simplificatrice et réductrice d'une longue et riche littérature, ils sont globalement corrects. Un deuxième objectif du travail est de confronter la théorie à la réalité empirique. Cette thèse est composée de "chapitres". Les chapitres 2 à 5 sont constitués, chacun d'un article dans son intégralité. Ceci signifie que le lecteur va retrouver dans chaque chapitre un papier avec introduction, développement et conclusions, et en cas de publication de l'article, une copie de celui-ci dans son format de présentation original. Le chapitre 6 contient les conclusions finales. Bien que chacune des parties constitue un composant isolé, l'enchainement garde un développement logique. Le chapitre 2 définit l'impôt sur lequel on souhaite travailler et présente la littérature sur les taux d'imposition effective avec quelques extensions. Une fois défini l'impôt sur le capital comme l'instrument sur lequel on centre notre attention, le chapitre 3 développe un modèle de concurrence fiscale. Le chapitre 4 observe la concurrence fiscale entre pays et fait un lien avec les mesures de convergence présentées dans le chapitre suivant. D'une manière similaire, le chapitre 5 tente d'observer la convergence fiscale entre pays d'une façon empirique.

Šiame darbe per mokestinių pajamų lygio ir struktūros, valstybės išlaidų lygio ir struktūros, valstybės skolos ir tiesioginių užsienio investicijų kaitos prizmę nagrinėjamas tarptautinės mokestinės konkurencijos poveikis Lietuvos valstybės finansų sistemai ir ūkiui. Darbe pristatomi pagrindiniai tarptautinės mokestinės konkurencijos aspektai, išskiriant du vyraujančius požiūrius į šį reiškinį. Holistinis požiūris pateikia neigiamas nuostatas mokestinės konkurencijos atžvilgiu, metodinio individualizmo požiūris į mokestinę konkurenciją yra teigiamas. Darbe suformuluotos prielaidos apie tarptautinės mokestinės konkurencijos ir mokestinės naštos, mokestinių pajamų ir išlaidų struktūros, valstybės skolos, tiesioginių užsienio investicijų pokyčių ryšį Lietuvoje per 1993 – 2008 m. laikotarpį. Atlikto tyrimo rezultatai rodo, kad Lietuvoje tarptautinė mokestinė konkurencija turėjo daugiau teigiamų efektų nei neigiamų. / This diploma paper analyses impact of international tax competition to Lithuania‘s public finance sector and economy trough tax revenue level and structure, public expenditures level and structure, public debt and foreign direct investments change trends. This paper introduces main theoretical international tax competition issues, separating two dominant views to this phenomenon. Holistic view proposes negative altitude to tax competition, methodical individualism has positive view to tax competition. In order to achieve main paper‘s goal hypothesis about international tax competition and tax burden, tax revenue, expenditure structure, public debt, foreign direct investment connection in Lithuania during period of year 1993 – 2008 are held. Research results shows that in case of Lithuania international tax competition had more positive effects than negative.

Questions on the optimal size of government always provoke intense political debate. At the center of this is the public goods problem, where certain goods and services are “under-provided” by the market due to problems with rivalry and excludability. These goods are usually provided by the public sector and financed through taxes. Questions emerge over the optimal level of provision, as different individuals value these goods differently. This dissertation consists of two studies which address preferences for the size of government from different perspectives. The first study provides a method that can be used to estimate demand for changes in levels of public provision. Using individual level Census data on migration from 1990 and 2000, I demonstrate how preferences are revealed through migration responses. Though policy convergence precludes the estimation of optimal levels for different demographic groups, I find that balanced-budget increases in education expenditures tend to attract most demographic groups while other expenditures tend to repel most individuals. Young, college educated, relatively high-income individuals tend to be more responsive to, and therefore appear to have higher preference intensity for, fiscal changes. This is true even when controlling for their increased propensity to migrate. Evidence inconsistent with welfare migration is found, suggesting that policies intended to address the race-to-the-bottom in welfare benefits may be counterproductive. In addition, the ability of the Tiebout migration process to homogenize a jurisdiction is limited by relatively small fiscal changes among jurisdictions and similar migration responses among demographic groups. The second study empirically explores the effect of ethnic heterogeneity on government size for countries throughout the world. In the developed world, heterogeneity is found to reduce the size of budgetary government, consistent with previous studies and predictions in the literature. In the undeveloped world, however, heterogeneity is found to increase the size of non-budgetary government and may increase the overall size of government.

The member countries of the enlarged European Union show large differences in the structure of their tax systems. While consumption taxes have been largely harmonized over the past decades, differences remain in taxes on factor incomes, in particular on capital income. Also, effective tax rates on capital income in Central and Eastern European countries (CEEC) have been falling substantially over the last decade- a trend that may suggest that some tax competition has taken place in the enlarged European Union. The contribution of this paper is twofold. First, it presents and contrasts effective tax rates of Western European countries with those of the CEEC. Second, from a theoretical aspect, it presents a model framework within which a quantitative macroeconomic analysis of tax competition between the two regions can be conducted. In addition the model suggests that part of the large real exchange rate appreciation and current account deficits that CEE countries have experienced during the last decade might be attributed to effects from tax competition. (author's abstract) / Series: Discussion Papers SFB International Tax Coordination