di Julia Braun
The current international tax system diverges greatly from a theoretically ‘‘optimal’’ tax system.
One reason for this discrepancy may be that politicians strive for other objectives rather than
making tax rules that comply with the theoretical concepts of optimal taxation. In this article, I
overview the approaches used in the economic and legal literature to explain the motivations of
policymakers involved in international taxation and contrast them with ‘real world’ observations.
The article illustrates that the making of international tax policy is affected by various factors: the
structure of the international tax system, domestic pressure groups, along with self-interested politicians
and bureaucrats. Considering the complexity of the conditions under which international
tax policy is made, it is not astonishing that international tax law deviates significantly from the
principles characterizing ‘‘ideal’’ taxation.
di Giuseppe Garofalo
The paper deals with the topic of interest rate, which has long been confused with usury and is
determined by parsimony and the marginal product of capital or, as an alternative, by conventions.
It will be shown how the return differentials and the ever changing relationship that financial
capital establishes with industrial capital are determined, starting from the risk-free rate or
benchmark. As far as the level of the interest rate is concerned, the risks connected with both a
‘‘high’’ and a ‘‘low’’ cost of money are outlined. After having demonstrated how interest rate is,
on the one hand, a policy variable and, on the other, a determinant of investments and the output
gap, it will be shown how his level affects income distribution, the area in which the dialogue between
economics and ethics has been most fertile.
di Martin Zagler
Tax coordination is an important issue for Europe. This paper has two ambitions. First, we review
the economic literature on tax coordination. Second, we argue that the taxation of capital is not
an issue of efficiency, but instead an issue of equity. In particular, capital tax coordination can alter
the vertical distribution of income between the production factors capital and labour. Capital
is in perfectly elastic supply in a small open economy. Therefore the tax incidence falls to the immobile
factor, labour. By contrast, capital is in inelastic supply at the international level, and
therefore the capital tax incidence falls completely on capital, without welfare losses of taxation.
di Marta Spreafico
The link between economic growth and institutions has been studied, theoretically and empirically,
for more than ten years. The aim of this paper is to take stock of this literature in order to identify
more precise and conscious directions for future research. First, we introduce the reference framework
and raise some questions the literature should be able to answer. Then, we organise critically
all the contributions so as to explain each result and the different paths undertaken. Finally,
we conclude with several issues we believe deserve further attention.