Optimal International Taxation and Growth Rate Convergence: Tax Competition vs. Coordination

Assaf Razin, Chi Wa Yuen

Research output: Contribution to journalArticlepeer-review

7 Scopus citations


Optimal international taxation and its implications for convergence in long run income growth rates are analyzed in the context of an endogenously growing world economy with perfect capital mobility. Under tax competition (i) the residence principle will maximize national welfare; (ii) the optimal long run tax rate on capital incomes from various sources will be zero in all countries; and (iii) long term per capita income growth rates will be equalized across countries. Under tax coordination, (i) becomes irrelevant while (ii) and (iii) will continue to hold. In other words, optimal tax policies are growth-equalizing with and without international policy coordination.

Original languageEnglish
Pages (from-to)61-78
Number of pages18
JournalInternational Tax and Public Finance
Issue number1
StatePublished - 1999


FundersFunder number
Research Grant CouncilHKU496/94H, HKU396/96H, HKUST 88/92H


    • Capital mobility
    • Growth rate convergence
    • Optimal capital taxation
    • Tax competition
    • Tax coordination


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