Global Tax Revolution: The Rise of Tax Competition and the Battle to Defend It

Global Tax Revolution: The Rise of Tax Competition and the Battle to Defend It

Global Tax Revolution: The Rise of Tax Competition and the Battle to Defend It

Global Tax Revolution: The Rise of Tax Competition and the Battle to Defend It

Synopsis

"This book explores one of the most dynamic and exciting aspects of globalization - international tax competition. With rising mobility and soaring capital flows, individuals and businesses are gaining freedom to work and invest in nations with lower tax rates. That freedom is pressuring governments to cut taxes on income, investment, and wealth. In Global Tax Revolution, Chris Edwards and Daniel Mitchell chronicle tax reforms around the world in recent decades. They describe the dramatic business tax cuts of Ireland, the flight of successful people from high-tax France, and the introduction of simple "flat taxes" in more than two dozen nations. The authors argue that the U. S. economy can be revitalized by embracing competition and overhauling the federal tax code. They discuss how current tax rules suppress wages and investment and describe the tax changes needed for workers and businesses to succeed in the fast-paced global economy. Rather than idly complaining about jobs and capital moving offshore, this book argues that policymakers need to embrace major tax reforms to ensure rising standards of living for Americans in the years ahead."

Excerpt

A fear is haunting big governments around the world—the fear of rising tax competition. As globalization advances, individuals and businesses are gaining greater freedom to work and invest in countries with lower taxes. That freedom is eroding the monopoly power of governments and forcing them to reform their tax systems and restrain their fiscal appetites.

Many governments have responded to globalization with tax cuts designed to improve competitiveness and spur growth. Individual income tax rates have plunged in recent decades, and more than two dozen nations have replaced their complex income taxes with simple flat taxes. At the same time, nearly every country has slashed its corporate tax rate, recognizing that business investment and profits have become highly mobile in today's economy.

That is the good news. the bad news is that some governments and international organizations are trying to restrict tax competition. a battle is unfolding between those policymakers wanting to maximize taxation and those understanding that competition is leading to beneficial tax reforms. If plans to stifle tax competition gain ground, growth will be undermined, governments will grow larger, and economic freedom will be curtailed.

In this book, we chronicle the rise in tax competition, which was spurred by the unleashing of international capital flows beginning in the 1970s. We survey the exciting tax reforms that are taking place around the world and explain how these reforms benefit average workers and families. We also examine the backlash against tax competition and describe why the arguments of the critics are mistaken.

The concluding chapter discusses reform options for the United States. in many ways, America has fallen behind on tax reform and now its climate for investment is inferior to that of other major countries. As tax competition intensifies, it is crucial to overhaul the federal tax code to ensure America's continued prosperity and leadership in the world economy.

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