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IEB09-01_Rork+Wagner.pdf (557.75 KB)

Document type

Working paper

Publication date

2009

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cc-by-nc-nd, (c) Rork, et al., 2009
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/116925

Reciprocity and Competition: Is there a connection?

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Abstract

One challenge states face in designing an income tax system is decidint how to treat non-resident earners. Numerous states have entered into reciprocity agreements with other states that exclude non-residents’ income from the tax base. These agreements provide a unique opportunity to explore the nature of state tax competition. We demonstrate that not only do reciprocity agreements dampen competition over income taxes, but the states that enact agreements also exhibit decreased levels of competition over other tax bases. This suggests that reciprocity agreements are a credible vehicle for states to act cooperatively and avoid a potential race to the bottom.

Subject

Econometria, Anàlisi espacial (Estadística), Competència (Dret), Jurisdicció

Subject (English)

Econometrics, Spatial analysis (Statistics), Competent authority, Jurisdiction

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IEB (Institut d’Economia de Barcelona) – Working Papers

Citation

RORK, Jonathan C. and WAGNER, Gary A. Reciprocity and Competition: Is there a connection?. IEB Working Paper 2009/01. [consulted: 17 of August of 2026]. Available at: https://hdl.handle.net/2445/116925

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