A number of countries have reduced or announced a reduction of corporate taxes. This research paper shows that we can expect this to set in motion a new round of international corporate taxes. Previously, Denmark has followed tax cuts in other countries, and would enjoy an advantage by reacting as quickly as possible, rather than waiting for increased pressure. Lower corporate taxes will not only be appropriate in light of tax competition, but are also the most effective tool we know of to fulfil political wishes for greater productivity.
What is novel here is that not only small countries are taking the lead in the corporate tax competition. Large countries, with the United States at the forefront, are considering drastic tax cuts — in the US, cuts in excess of half the current rate, and in some cases effectively eliminating corporate tax. Large countries can afford higher rates than small countries; and, therefore, the corporate tax contest increases as they reduce it.