Around the world, the tax laws are shaped by concerns with competitiveness. This paper provides a general theory of how taxes impact competitiveness. As part of that theory, this paper also introduces the concept of tax-based competitiveness neutrality. A tax system is competitively neutral when taxes do not cause competitors to change their relative valuations of any investments. This paper then uses that theory to evaluate tax policy in two high profile and important areas. The paper begins by describing two models of competitiveness, called the conduit or new money model and the investor or old money model. The central difference between the models is whether the competition is between conduit entities that must compete for funds or is between the ultimate investors themselves. When the competition is between conduits that raise the funds to invest, competitiveness neutrality requires that the tax cost of the investment be the same across entities. In contrast, when the competition is between investors who invest their own money, then neutrality does not require that the tax cost be equal across the investors. Instead, when investors are investing their own money, competitiveness neutrality requires only that tax incentives have the same dollar value for all competitors. This paper then uses the theory of competitiveness neutrality to analyze two sets of laws that were heavily influenced by concerns with competitiveness. They are the unrelated business income tax (UBIT) and the tax treatment of cross-border transactions. In both areas, the failure to recognize the nature of the competition has caused policymakers and scholars to rely on the incorrect model in designing and evaluating tax policy.