Tax compliance and fiscal externalities: Evidence from U.S. diesel taxation

Tax compliance and fiscal externalities: Evidence from U.S. diesel taxation. Erich Muehlegger, November 2014, Paper. "Fiscal externalities across jurisdictions can arise from imperfect tax enforcement and the avoidance behavior of taxpayers. Base shifting to low tax jurisdictions tends to generate positive fiscal externalities, while understating the overall tax liability leads to negative fiscal externalities when the tax base is apportioned across jurisdictions. While much of the literature has focused base shifting and the resulting “race-to-the-bottom” in tax rates, we examine an empirical setting illustrating how negative fiscal externalities can..." Link