Tax competition
Form of regulatory competition / From Wikipedia, the free encyclopedia
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Tax competition, a form of regulatory competition, exists when governments use reductions in fiscal burdens to encourage the inflow of productive resources or to discourage the exodus of those resources. Often, this means a governmental strategy of attracting foreign direct investment, foreign indirect investment (financial investment), and high value human resources by minimizing the overall taxation level and/or special tax preferences, creating a comparative advantage.
Scholars generally consider economic development incentives to be inefficient, economically costly, and distortionary.[1]