Why Corporate Taxes May Rise: The Case of Trade Liberalization and Foreign Ownership

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Why Corporate Taxes May Rise: The Case of Trade Liberalization and Foreign Ownership

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Kind, Hans Jarle
Schjelderup, Guttorm
Ulltveit-Moe, Karen-Helene

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Abstract

Almost all the literature on tax competition in the presence of multinationals (MNCs) and profit shifting ignores trade costs. This Paper studies how economic integration, in terms of reduced trade costs and internationalization of ownership, affects tax competition and equilibrium corporate taxes. We find that equilibrium taxes increase subsequent to a reduction of trade costs if MNCs are owned by home country residents and also subsequent to increased internationalisation of ownership.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3383.

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Date of creation: May 2002
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Handle: RePEc:cpr:ceprdp:3383

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Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
F20 - International Economics - - International Factor Movements and International Business - - - General
H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

This paper has been announced in the following NEP Reports:

NEP-ALL-2003-02-18 (All new papers)
NEP-POL-2003-02-18 (Positive Political Economics)

References listed on IDEAS
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.:

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Other versions:
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Other versions:
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Markusen, James R., 2002. "Multinational Firms and the Theory of International Trade," MPRA Paper 8380, University Library of Munich, Germany. [Downloadable!]
Other versions:
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Other versions:
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Haufler, A. & Schjelderup, G., 1999. "Corporate Tax Systems and Cross Country Profit Shifting," Papers 1/99, Norwegian School of Economics and Business Administration-.
Other versions:
- Haufler, Andreas & Schjelderup, Guttorm, 2000. "Corporate Tax Systems and Cross Country Profit Shifting," Oxford Economic Papers, Oxford University Press, vol. 52(2), pages 306-25, April.
Michael Keen, 1993. "The welfare economics of tax co-ordination in the European Community : a survey," Fiscal Studies, Institute for Fiscal Studies, vol. 14(2), pages 15-36, February.

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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.)

O. Amerighi, 2006. "Transfer Pricing and Enforcement Policy in Oligopolistic Markets," Working Papers 567, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
Other versions:
- AMERIGHI, Oscar, 2004. "Transfer pricing and enforcement policy in oligopolistic markets," CORE Discussion Papers 2004069, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]

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