Fiscal competition – blessing or bane?

In a bid to attract companies and wealthy individuals several countries in Europe as well as some Swiss cantons have reduced tax rates considerably over the past few years. The danger is though that lower taxes can also lead to cuts in public spending and vital services. Is it worth the risk?

There is also nothing that guarantees that firms or rich people will stay if they find a better deal elsewhere. So does it make sense to participate in this race from an economic point of view or is it simply kowtowing to the wealthy and big companies? Let us know what you think.