| Summary: | 碩士 === 國立政治大學 === 財政研究所 === 99 === As the development of economy, the environment becomes much polluted. In recent years, environment protection has become an important issue, and people have tried to strike a balance between the development of economy and environment protection. In this thesis, we combine this idea and tax competition among jurisdictions, and discuss the issue that whether the tax competition among jurisdictions leads to “the race of bottom.” In this environmental quality, the local governments levy tax on the capital of polluting industries, with either unit tax or ad valorem tax and with fixed tax rate, and use the tax revenues to finance public goods. Each government also imposes a cap on firms’ emissions.
I obtain three main results:
(1) The competition between local governments will lead to the race to the bottom in environment policy.
(2) Given the same revenue per unit of tax, both the unit tax and the ad valorem tax lead to the same environmental policy.
(3) The level of race to the bottom in environment policy depends on the number of the competitors to the local government. As the number of jurisdictions increases, the more the level of race to the bottom in the environment policy.
Key words: environment policy, capital tax, tax competition
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