Tax Competition With and Without Preferential Treatment of a Highly-Mobile Tax Base

With the ongoing integration of the world economy, it is increasingly possible for taxpayers to shift taxable income across countries. This possibility gives rise to the well known problem of tax competition, whereby governments compete for internationally mobile sources of tax revenue by reducing the rates at which these sources are taxed. The result may be inefficiently low levels of tax revenue. See Wilson (1999) for a review of the tax competition literature.Working Paper Number 04-47

Tax Competition With Parasitic Tax Havens

We develop a tax competition framework in which some jurisdictions, called tax havens, are parasitic on the revenues of other countries. The havens use real resources to help companies camouflage their home-country tax avoidance, and countries use resources in an attempt to limit the transfer of tax revenues to the havens. The equilibrium price for this service depends on the demand and supply for such protection. Recognizing that taxes on wage income are also evaded, we solve for the equilibrium tax rates on mobile capital and immobile labor, and we demonstrate that the full or partial elimination of tax havens would improve welfare in non-haven countries, in part because countries would be induced to increase their tax rates, which they have set at inefficiently low levels in an attempt to attract mobile capital. We also demonstrate that the smaller countries choose to become tax havens, and we show that the abolishment of a sufficiently small number of the relatively large havens leaves all countries better off, including the remaining havens.

Online learning : towards enabling choice

Education is rapidly evolving from an opportunity that was provided mainly for an elite to one that is available to a mass markets and as such is prone to the forces generated by this environment. Where, in the established pattern, commercial interest was limited mainly to the use of skills developed during the educational process, the future model of educational provision will involve extensive commercial activity in the production, delivery and marketing of material. Already there are a number of commercial companies offering framework products enabling "off the shelf solutions" for the construction and delivery of web based courses in any subject area. The commercialisation of education is underway and it is inevitable that it will be viewed, by entrepreneurs and customers alike, as any other commercial product. It would seem reasonable that the consumer should be able to evaluate the performance of these new modes of working in a similar manner to other commercial products. This paper draws together current thinking on the problems associated with evaluating computer and communication based learning

Measuring the Efficiency Cost of Taxing Risky Capital Income

In this paper, we derive a measure of the efficiency cost of taxing risky capital income in an infinite horizon stochastic model. The resulting measure differs from all those that have been proposed in the existing literature. It can be represented by the expression -sigma(s) T(s)c(deltaX(s)), where T(s) measures the present value of the taxes that would be paid on a unit of investment in a riskless project with the same expected depreciation rate and tax treatment as capital invested in period s, X(s), while c(X(s)) represents the certainty equivalent to the representative individual of the lottery where measures the ex post change in investment in period s due to the tax change. The paper then compares this measure with others that have appeared in the literature. We were unable to find support for the argument in Bulow-Suinmers(1984) that the efficiency cost of taxing risky capital income is much larger than that implied by the measure -sigma(s)T(s)E(deltaX(s)). In fact, we show in special cases that our measure implies a smaller efficiency cost than does the measure -sigma(s)T(s)E(deltaX(s)).

A collaborative approach to learning programming: a hybrid learning model

The use of cooperative working as a means of developing collaborative skills has been recognised as vital in programming education. This paper presents results obtained from preliminary work to investigate the effectiveness of Pair Programming as a collaborative learning strategy and also its value towards improving programming skills within the laboratory. The potential of Problem Based Learning as a means of further developing cooperative working skills along with problem solving skills is also examined and a hybrid model encompassing both strategies outlined

Tax Structure and Government Behavior: Implications for Tax Policy

Changes in tax policy can affect all aspects of the economy. Not only do firms and individuals change behavior, creating efficiency costs, but government expenditure choices can also change. Unless these expenditure choices had been optimal' previously, changes in response to a tax reform affect welfare and should be taken into account when designing tax policy. This paper develops a specific model of government behavior and then explores the implications of government, as well as private, behavioral responses for tax policy. In particular, we assume that government officials favor expenditure (or regulatory) choices that increase the government's budget. As a result, higher tax rates on a particular activity encourage government behavior that aids the growth of this activity. This response enables tax policy to redirect government activity in desirable directions, but it also makes Pigovian taxes on negative externalities less effective.

Why Do Most Countries Set Higher Tax Rates on Capital?

We consider tax competition in a world with tax bases exhibiting different degrees of mobility, modeled as mobile and immobile capital. An agreement among countries not to give preferential treatment to mobile capital results in an equilibrium where mobile capital is nevertheless taxed relatively lightly. In particular, one or two of the smallest countries, measured by their stocks of immobile capital, choose relatively low tax rates, thereby attracting mobile capital away from the other countries, which are then left to set revenue maximizing taxes on their immobile capital. This conclusion holds regardless of whether countries choose their tax policies sequentially or simultaneously. In contrast, unrestricted competition for mobile capital results in the preferential treatment of mobile capital by all countries, without cross-country differences in the taxation of mobile capital. Nevertheless our main result is that the non-preferential regime generates larger global tax revenue, despite the sizable revenue loss from the emergence of low-tax countries. By extending the analysis to include cross country differences in productivities, we are able to resurrect a case for preferential regimes, but only if the productivity differences are sufficiently large.Tax Competition, Capital Mobility

Why Do Most Countries Set High Tax Rates on Capital?

We consider tax competition in a world with tax bases exhibiting different degrees of mobility, modeled as mobile and immobile capital. An agreement among countries not to give preferential treatment to mobile capital results in an equilibrium where mobile capital is nevertheless taxed relatively lightly. In particular, one or two of the smallest countries, measured by their stocks of immobile capital, choose relatively low tax rates, thereby attracting mobile capital away from the other countries, which are then left to set revenue maximizing taxes on their immobile capital. This conclusion holds regardless of whether countries choose their tax policies sequentially or simultaneously. In contrast, unrestricted competition for mobile capital results in the preferential treatment of mobile capital by all countries, without cross-country differences in the taxation of mobile capital. Nevertheless our main result is that the non-preferential regime generates larger global tax revenue, despite the sizable revenue loss from the emergence of low-tax countries. By extending the analysis to include cross-country differences in productivities, we are able to resurrect a case for preferential regimes, but only if the productivity differences are sufficiently large.Tax Competition, Capital Mobility

Bitter taste stimuli induce differential neural codes in mouse brain.

A growing literature suggests taste stimuli commonly classified as "bitter" induce heterogeneous neural and perceptual responses. Here, the central processing of bitter stimuli was studied in mice with genetically controlled bitter taste profiles. Using these mice removed genetic heterogeneity as a factor influencing gustatory neural codes for bitter stimuli. Electrophysiological activity (spikes) was recorded from single neurons in the nucleus tractus solitarius during oral delivery of taste solutions (26 total), including concentration series of the bitter tastants quinine, denatonium benzoate, cycloheximide, and sucrose octaacetate (SOA), presented to the whole mouth for 5 s. Seventy-nine neurons were sampled; in many cases multiple cells (2 to 5) were recorded from a mouse. Results showed bitter stimuli induced variable gustatory activity. For example, although some neurons responded robustly to quinine and cycloheximide, others displayed concentration-dependent activity (p<0.05) to quinine but not cycloheximide. Differential activity to bitter stimuli was observed across multiple neurons recorded from one animal in several mice. Across all cells, quinine and denatonium induced correlated spatial responses that differed (p<0.05) from those to cycloheximide and SOA. Modeling spatiotemporal neural ensemble activity revealed responses to quinine/denatonium and cycloheximide/SOA diverged during only an early, at least 1 s wide period of the taste response. Our findings highlight how temporal features of sensory processing contribute differences among bitter taste codes and build on data suggesting heterogeneity among "bitter" stimuli, data that challenge a strict monoguesia model for the bitter quality