What is a potential consequence of tax competition, as mentioned in the text?

Understand the Problem

The question is asking about the potential consequences of tax competition, as mentioned in a specific text. It requires an understanding of economic principles related to tax competition to provide an accurate answer.

More Information

Tax competition often leads countries to lower tax rates to attract foreign investment, which can reduce the funds available for social programs.

Tips

Don't confuse the effects of tax competition with general economic impacts; focus on the specific ways tax competition reduces governmental income.

Sources

• Theories of tax competition - ProQuest - proquest.com