It's a problem like the prisoner dilemma. It's beneficial to the country that "deflects" and gives a discount, but makes everyone worse off than if all countries held line on a higher tax rate.
(disclaimer: I mean it from a direct perspective of maximizing tax income. In this comment I'm not getting into the deeper economics/politics/philosophy of whether higher or lower taxes are better overall).
(disclaimer: I mean it from a direct perspective of maximizing tax income. In this comment I'm not getting into the deeper economics/politics/philosophy of whether higher or lower taxes are better overall).