Eric Toder (Urban Institute) presents International Taxation and Competitiveness at Pennsylvania today as part of its Center for Tax Law and Policy Speaker Series convened by Chris Sanchirico and Reed Shuldiner:

This paper explores whether there is anything to the concept of competitiveness, beyond the tautological position that competitiveness is equivalent to improving living standards. In what way do we compete with other nations and for what things? And how do tax policies affect that competition?

This paper defines competition with other nations in its traditional sense as a zero-sum game. In what ways does a gain for the United States come at the expense of a loss for other nations? Are those gains something policies should seek to achieve and at what price? And what tax policies would achieve them?

The following section of the paper considers five things we may be competing with other nations for: (1) labor supply, (2) financial and physical capital, (3) intangible capital, (4) tax revenues, and (5) natural resources. All of these objects of competition are inputs, which may contribute to higher living standards, but are not themselves a final goal of policy. And some policies to increase the U.S. share of some or all these inputs may come with costs that are not worth paying. Thus, competitiveness on these dimensions is potentially a means to an end, but not an end in itself. Subsequent sections examine how tax policy may affect the acquisition of these inputs and summarize the effects of alternative reforms of capital income taxation on dimensions of competitiveness.