Globalization, Institutions, and Tax Reform

Abstract

Globalization radically alters the institutional context in which a nation's tax policies are formulated and implemented. According to the so-called globalist orthodox view, the increasing mobility of capital and the increasing tax competition among nation-states will inevitably lead to the homogenization of tax policies across countries. The purpose of this study is twofold. The first is to provide and critique a stylized economic analysis of taxation in the globalized context. This article will question the notion of globalization and argue the importance of political and institutional factors behind tax policies even in the global-ized context. The second aim of this study is to evaluate how valid the two contrasting institutionalist perspectives are with regard to tax policies in the globalized world.