How should countries cooperate in setting fiscal and trade policies when government expenditures must be financed with distorting taxes? We show that even if countries cannot make explicit transfers to each other, every point on the Pareto frontier is production efficient, so that international trade and capital flows should be effectively free. Trade agreements must be supplemented with fiscal policy agreements. Residence-based income tax systems have advantages over source-based systems. Taxing all household asset income at a country-specific uniform rate and setting the corporate income tax to zero yield efficient outcomes. Value-added taxes should be adjusted at the border.

中文翻译：

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全球经济中的最优合作税收

当政府支出必须通过扭曲税收来融资时，各国应该如何合作制定财政和贸易政策？我们表明，即使国家之间不能进行明确的转移，帕累托边界上的每一点都是生产效率高的，因此国际贸易和资本流动实际上应该是自由的。贸易协定必须辅之以财政政策协定。基于居住地的所得税制度比基于来源的制度具有优势。以国家特定的统一税率对所有家庭资产收入征税，并将企业所得税设为零，从而产生有效的结果。增值税应在边境进行调整。