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Classical Corporation Tax as a Global Means of Tax Harmonization

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Author Info
Kari, Seppo
Ylae-Liedenpoha, Jouko

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Abstract

Classical corporation tax entails double taxation of corporate income. The alternative practice to impute corporation tax to the domestic recipients of dividends is shown, in the case of a company with international owners, effectively to convert the imputation system back to a classical corporation tax. It also requires complex rules for exempting flow-through dividends from equalization tax to avoid the cumulation of corporation tax internationally. In contrast, classical corporation tax maintains its simplicity and can be designed so as to be neutral in respect of the financing and dividend decisions of multinationals, by adopting double taxation of interest income. Broad tax bases, flat-rate taxes on personal income from capital, and low statutory tax rates are advocated as general policy.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 665.

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Date of creation: 2002
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Handle: RePEc:ces:ceswps:_665

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Find related papers by JEL classification:
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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  1. Sijbren Cnossen, 1996. "Company Taxes in the European Union: Criteria and Options for Reform," Fiscal Studies, Institute for Fiscal Studies, vol. 17(4), pages 67-97, November. [Downloadable!]
  2. King, Mervyn A, 1974. "Taxation and the Cost of Capital," Review of Economic Studies, Blackwell Publishing, vol. 41(1), pages 21-35, January. [Downloadable!] (restricted)
  3. Auerbach, Alan J, 1983. "Taxation, Corporate Financial Policy and the Cost of Capital," Journal of Economic Literature, American Economic Association, vol. 21(3), pages 905-40, September. [Downloadable!] (restricted)
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  4. Hartman, David G., 1985. "Tax policy and foreign direct investment," Journal of Public Economics, Elsevier, vol. 26(1), pages 107-121, February. [Downloadable!] (restricted)
  5. Boadway, Robin & Bruce, Neil, 1992. "Problems with integrating corporate and personal income taxes in an open economy," Journal of Public Economics, Elsevier, vol. 48(1), pages 39-66, June. [Downloadable!] (restricted)
    Other versions:
  6. Arnold C. Harberger, 1962. "The Incidence of the Corporation Income Tax," Journal of Political Economy, University of Chicago Press, vol. 70, pages 215. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Pekka Sinko & Juha Kilponen, 2003. "Does Centralised Wage Setting Lead into Higher Taxation?," Discussion Papers 314, Government Institute for Economic Research Finland (VATT). [Downloadable!]
    Other versions:
  2. Leena Kerkelä & Johanna Pohjola & Raisa Mäkipää, 2003. "Who Gains from Credited Forest Carbon Sinks: Finland and other Annex I Countries in Comparison," Discussion Papers 291, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  3. Robert Brooks & Bhavish Jugurnath & Mark Stewart, 2004. "Dividend taxation and Corporate investment: A comparative study between the classical system and imputation system of dividend taxation in the United States and Australia," Econometric Society 2004 Australasian Meetings 97, Econometric Society. [Downloadable!]
  4. Reino Hjerppe, 2003. "Social Capital and Economic Growth Revisited," Discussion Papers 307, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  5. Kari, Seppo & Ylae-Liedenpohja, Jouko, 2003. "Taxation and Valuation of International Real Investments," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  6. Heikki Räisänen, 2003. "How to Cope with Labour Market Policy Tools in Economic Downturn: Finnish Evidence," Discussion Papers 305, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  7. Olli-Pekka Oksanen, 2006. "Are Foreign Investments Replacing Domestic Investments? - Evidence from Finnish Manufacturing," Discussion Papers 1001, The Research Institute of the Finnish Economy. [Downloadable!]
  8. Ossi Korkeamäki & Tomi Kyyrä, 2003. "The Gender Wage Gap and Sex Segregation in Finland," Discussion Papers 288, Government Institute for Economic Research Finland (VATT). [Downloadable!]
    Other versions:
  9. Aki Kangasharju & Sari Pekkala, 2002. "Adjustment to Regional Labour Market Shocks," Discussion Papers 274, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  10. Jaakko Kiander & Elina Berghäll, 2003. "The Finnish Model of STI Policy: Experiences and Guidelines. KNOGG Thematic Network WP4 Country Report - Finland," Discussion Papers 313, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  11. Pekka Sinko, 2002. "Labour Taxation, Tax Progression and Job Matching - Comparative Alternative Models of Wage Setting," Discussion Papers 285, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  12. Seppo Kari & Ylä-Liedenpohja & Jouko, 2005. "Cost of Capital for Cross-border Investment: The Fallacy of Estonia as a Tax Haven," Discussion Papers 367, Government Institute for Economic Research Finland (VATT). [Downloadable!]
    Other versions:
  13. Pekka Sinko, 2003. "Subsidizing vs. Experience Rating of Unemployment Insurance in Unionized Labor Markets," Discussion Papers 319, Government Institute for Economic Research Finland (VATT). [Downloadable!]
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This page was last updated on 2009-12-1.

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