What is tax competition?

“Tax competition” is a euphemistic term for cutting corporate tax rates and deregulating to attract foreign investment based on the misconception that countries can compete like companies in a market. In reality, competition between companies in a market bears no resemblance to the functioning and interdependencies of local and global economies, nor the funding or operating of nation states.

Tax competition has been widely debunked as a false economy that results in a global race to the bottom where countries spiral down to low corporate tax rates in a bid to out do each other while failing to produce economic growth. Surveys show that tax rates are low on the list of factors that companies consider when choosing where to setup and operate. Factors that rank as more important to companies are infrastructure, rule of law, healthy and educated workforces, and other public goods – all of which require tax.

Learn more about tax competition and the race to the bottom here.