The free-market case against tax competition

Friday, September 28, 2018

Those who believe in the power of competition to produce optimal market outcomes tend to view taxation, regulation, and other forms of state intervention as hurdles to growth and prosperity. But by arguing in favour of “tax competition” amongst advanced economies, they are supporting a status quo that encourages monopoly. SIMON TILFORD* writes

LONDON: The global race to cut corporate tax rates accelerated in 2018. According to the OECD’s latest annual review of tax policies across developed economies, the average rate of taxation on corporate profits has fallen from 32.5% in 2000 to below 24% today.

This trend is understandable. With private-sector investment remaining stubbornly weak, governments are desperate to hold on to whatever piece of the pie they can.

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The free-market case against tax competition