President-elect Barack Obama promised on the campaign trail to restore higher tax rates for America?s highest earners (those earning at least $200,000 or $250,000, depending on the speech you heard).

Moving forward with that plan would be a mistake, if you believe the arguments set out in Global Tax Revolution: The Rise of Tax Competition and the Battle to Defend It, a new book from two Cato Institute experts.

Chris Edwards and Daniel Mitchell explain that one of the positive consequences of increased globalization is the ability of taxpayers to shift their tax burdens more easily to low-tax countries. Countries seeking investment have responded by competing for investment. They?ve slashed tax rates and simplified tax codes.

Tax competition is all about choice, and that makes it similar to competition in the marketplace for good and services. In the marketplace, people compare the costs and benefits of products when deciding what to buy. Consumer choice encourages businesses to produce efficiently and to respond to the real needs of individuals. To an extent, tax competition does the same thing for governments. By limiting the ability of politicians to raise taxes, it encourages them to implement better tax policies and be more frugal with taxpayer money.

Edwards and Mitchell also sound a warning bell about efforts to limit tax competition, especially from groups such as the Organization for Economic Cooperation and Development.

Those who have not yet grasped the potential benefits of competition might want to study its effectiveness in other areas. They?ll find evidence here, here, and here.