Tax competition

Tax competition occurs when countries or regions try to attract businesses and residents by offering lower tax rates or better fiscal policies. Essentially, governments compete to make their jurisdiction more appealing by reducing taxes, which can lead to a "race to the bottom." While this can benefit taxpayers in the short term, it may also decrease government revenue, impacting public services and infrastructure. Overall, tax competition influences how countries design their tax systems and can shape economic activity, investment, and policy decisions globally.