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Article: Understanding uniformity and diversity in state corporate income taxes.(Forum: Reflections by Recent Recipients of the Holland Medal, part 1)
- Article from:
- National Tax Journal
- Article date:
- March 1, 2008
- Author:
CopyrightCOPYRIGHT 2008 National Tax Association. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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INTRODUCTION
Uniformity in taxation can yield substantial benefits. It can hold down costs of compliance and administration (1) and avoid gaps and overlaps in taxation, and, therefore, inequities and tax-induced distortions of economic decisions that are unrelated to differences in tax rates. Of course, uniformity can also entail costs, especially if it extends to tax rates. Harmonization of rates in effect creates a cartel and eliminates the beneficial effects of tax competition. (2) By comparison, if tax rates converge to levels required to reflect benefits of public services economic efficiency (but perhaps not equity as some would define it) would be ...