Fiscal Competitiveness and Total Competitiveness: A Note.

The article presents research on the effect of government fiscal policy, particularly the taxation of corporations, on the decisions of businesses to locate operations in a particular locality, region, or country. Competition for such businesses has become acute due to globalization. Economic indicators from five U.S. states strongly suggest that corporate taxation rates are but one of many factors determining a business's decision on location. Persistently higher wage rates in Ontario compared to U.S. states is primarily due to the foreign exchange rate between the U.S. and Canada rather than the province's taxation and labor laws.