Gugl, ElisabethZodrow, George R.2015-10-012015-10-012015Gugl, Elisabeth and Zodrow, George R.. "Competition in Business Taxes and Public Services: Are Production-Based Taxes Superior to Capital Taxes?." <i>National Tax Journal,</i> 68, no. 3S (2015) National Tax Association: 767-802. http://dx.doi.org/10.17310/ntj.2015.3S.03.https://hdl.handle.net/1911/81859Although most of the tax competition literature focuses on the provision of local public services to households, several papers analyze tax competition when capital taxes are used to finance local public services provided to businesses, examining the conditions under which such services are provided efficiently, under-provided, or over-provided. In addition, several prominent observers have noted that “benefit-related” business taxation is desirable on both efficiency and equity grounds and argued that such taxation should take the form of a tax based on production, such as an origin-based value-added tax. We evaluate this contention in this paper, comparing the relative efficiency properties of these alternative business taxes. Our simulation results suggest that under many, but not all, circumstances it is more efficient to finance business public services with an origin-based production tax rather than a source-based capital tax.engThis is an author's peer-reviewed final manuscript, as accepted by the publisher. The published article is copyrighted by the National Tax Association.Journal articlebusiness public servicesinfrastructuretax competitioncapital taxesproduction taxesorigin-based VAThttp://dx.doi.org/10.17310/ntj.2015.3S.03