Tax-Transfer: Competition and Coordination among Host Countries

Abstract

This chapter discusses tax-transfer-related competition and coordination between host countries, revealing that tax-transfer competition models in host countries are based on a system of collective decision-making. The analysis of tax-transfer competition is based on the assumption of free migration, with an increased number of migrants of different skill types to the host countries. The number of such migrants increases with the level of benefits derived from the host countries. Another trend is that migrants disregard preference for any specific host country. When migrating to a country, migrants only emphasize the level of utility and benefits to be enjoyed in a host country. Host countries also need to coordinate respective fiscal policies to maximize the utility for the decisive voter.