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The use of neutralities in international tax policy

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  • David Weisbach

    (University of Chicago)

Abstract

This paper analyzes the use of neutrality conditions, such as capital export neutrality, capital import neutrality, capital ownership neutrality, and market neutrality, in international tax policy. Neutralities are not appropriate tools for designing tax policy. They each identify a possible margin where taxation may distort business activities. Because these neutralities cannot be all satisfied simultaneously, however, they do not allow analysts to determine the appropriate trade-offs of theses distortions, unlike deadweight loss measures used in other areas of tax policy. International tax policy should instead be tied directly to the reasons for taxing capital income, reasons which are derived from optimal tax or simliar models.

Suggested Citation

  • David Weisbach, 2014. "The use of neutralities in international tax policy," Working Papers 1414, Oxford University Centre for Business Taxation.
    • Handle: RePEc:btx:wpaper:1414
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    File URL: http://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/series-14/WP1414.pdf
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    References listed on IDEAS

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    Cited by:

    1. Bradley, Sebastien & Carril-Caccia, Federico & Yotov, Yoto, 2023. "Reassessing the Effects of Corporate Income Taxes on Mergers and Acquisitions Using Empirical Advances in the Gravity Literature," School of Economics Working Paper Series 2023-8, LeBow College of Business, Drexel University.
    2. Kayis-Kumar, Ann, 2018. "Implementing corporate tax cuts at the expense of neutrality? A legal and optimisation analysis of fundamental reform in practice," MPRA Paper 89703, University Library of Munich, Germany.
    3. Bradley, Sebastien & Robinson, Leslie & Ruf, Martin, 2021. "The impact of IP box regimes on the M&A market," Journal of Accounting and Economics, Elsevier, vol. 72(2).

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    Keywords

    International taxation; capital export neutrality; capital import neutrality; ownership neutrality; optimal taxation;
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