Assaf Razin, Efraim Sadka, 18 December 2017

The ongoing advance of globalisation has created a genuine need for international tax reforms. This column explores potential reforms and their likely effects, using a model with flexible prices. Residence-based income taxation is shown to have welfare advantages over source-based taxation, though at the cost of a larger trade deficit. Non-transitory border taxes are shown to be ineffective at reducing this deficit.

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