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Leaning right and learning from the left: diffusion of corporate tax policy across borders

Jensen, N. M. and Lindstadt, Rene 2012. Leaning right and learning from the left: diffusion of corporate tax policy across borders. Comparative Political Studies 45 (3) , pp. 283-311. 10.1177/0010414011421313

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Abstract

There is an increased focus in comparative politics and international relations on how choices of governments are dependent on choices made by other governments. The authors argue that although the relationship between policy choices across countries is often labeled as either diffusion or competition, in many cases the theoretical mechanisms underpinning these labels are unclear. In this article, the authors build a model of social learning with a specific application to the diffusion of corporate tax reductions. The model yields predictions that are differentiable from existing models of tax competition. Specifically, the authors argue that social learning is most likely in the wake of tax policy cuts by left governments. They test the model using an existing data set of corporate tax rate changes and an author-created data set of changes in tax legislation, covering 20 Organisation for Economic Co-operation and Development countries. The authors’ empirical findings show that social learning is an important determinant of corporate tax policy making.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Department of Politics and International Relations (POLIR)
Subjects: J Political Science > JA Political science (General)
Uncontrolled Keywords: Tax competition; Corporate taxation; Race to the bottom; Fiscal policy; Foreign direct investment (FDI); Diffusion; Social learning
Publisher: Sage
ISSN: 0010-4140
Last Modified: 09 Jun 2020 01:43
URI: http://orca.cf.ac.uk/id/eprint/98134

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