Hmmm...tax competition over mobile capital is quickly becoming tax competition for mobile workers. https://twitter.com/GreekAnalyst/status/1331589398568316929

The challenge of keeping the mobile factors when other countries respond by offering better options will be the same. Some mobile capital and labor could "put down roots" and help economies in the long term, but that's not guaranteed.

Meanwhile domestic factors that don't benefit from the preferences may begin to see the preferential treatment of foreign investment or recent immigrants as unfair...unless the policy benefits accrue to the economy as a whole with spillover effects...again, not guaranteed.

This is why when I think about tax competition, I think of it in the context of neutrality rather than preferences. Re-gearing tax systems to benefit the economy as a whole can be attractive to foreign investment and workers without putting complex preference regimes in place.

To sum up... governments should put political capital into *better* tax systems overall rather than trying to engineer inward FDI or migration through special preferences.

More here: https://taxfoundation.org/2020-international-tax-competitiveness-index/