A Study on Theoretical Framework of International Tax Competition

With the development of economic globalization and regional economic integration,the competition for tax base between countries( regions) is becoming more intense. Tax competition leads to lower tax rate and reducing public goods spending. However,public economics puts forwards challenge for the negative effects of tax competition,and welfare economics,information economics,new economic geography and other disciplines also discuss these questions. Tax competition theory originates from the governments competing for capital which is induced by the fiscal decentralization system. This paper reviews the standard tax competition theory,and then based which analyzes the effects of international tax competition and the relationship between tax competition and tax coordination.