Corporate Taxation, Profit Shifting, and the Efficiency of Public Input Provision
AbstractIn this paper we analyze the implications for the national provision of public inputs when profit shifting is possible, albeit costly, for internationally integrated firms. In this case a high level of public infrastructure will attract real investment, but the firm can at least partly avoid to pay correspondingly high corporate taxes. In contrast to much of the recent literature on capital tax competition and public infrastructure provision, we thus find that public inputs will be unambiguously underprovided when the corporate tax falls only on pure profits and international taxation follows the source principle. Extensions of the basic model cover the case of distortive capital taxes and alternative international tax regimes.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.
Volume (Year): 56 (1999)
Issue (Month): 3/4 (July)
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Web page: http://www.mohr.de/fa
Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany
Other versions of this item:
- Haufler, A. & Schjelderup, G., 1999. "Corporate Taxation, Profit Shifting, and the Efficiency of Public Input Provision," Papers 18/99, Norwegian School of Economics and Business Administration-.
- Haufler, Andreas & Schjelderup, Guttorm, 1999. "Corporate taxation, profit shifting, and the efficiency of public input provision," Center for European, Governance and Economic Development Research Discussion Papers 4, University of Goettingen, Department of Economics.
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
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- Paolo Panteghini & Guttorm Schjelderup, 2006. "To Invest or not to Invest: A real options approach to FDIs and tax competition," International Tax and Public Finance, Springer, vol. 13(6), pages 643-660, November.
- Sorensen, Peter Birch, 2004. "International tax coordination: regionalism versus globalism," Journal of Public Economics, Elsevier, vol. 88(6), pages 1187-1214, June.
- Stöwhase, Sven, 2002. "Profit Shifting opportunities, Multinationals, and the determinants of FDI," Discussion Papers in Economics 29, University of Munich, Department of Economics.
- Andreas Haufler & Sven Stöwhase, 2003. "Taxes as a Determinant for Foreign Direct Investment in Europe," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 1(2), pages 45-51, 02.
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