IDEAS home Printed from https://ideas.repec.org/p/fer/dpaper/266.html
   My bibliography  Save this paper

Classical Corporation Tax as a Global Means of Tax Harmonization

Author

Listed:
  • Kari, Seppo
  • Ylä-Liedenpohja, Jouko

Abstract

Classical corporation tax entails double taxation of corporate income. The alternative practice of imputing corporation tax to the domestic recipients of dividends is shown, in the case of a company with international owners, to effectively 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.

Suggested Citation

  • Kari, Seppo & Ylä-Liedenpohja, Jouko, 2002. "Classical Corporation Tax as a Global Means of Tax Harmonization," Discussion Papers 266, VATT Institute for Economic Research.
    • Handle: RePEc:fer:dpaper:266
    as

    Download full text from publisher

    File URL: https://www.doria.fi/handle/10024/148215
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Auerbach, Alan J, 1983. "Taxation, Corporate Financial Policy and the Cost of Capital," Journal of Economic Literature, American Economic Association, vol. 21(3), pages 905-940, September.
    2. Arnold C. Harberger, 1962. "The Incidence of the Corporation Income Tax," Journal of Political Economy, University of Chicago Press, vol. 70(3), pages 215-215.
    3. Clemens Fuest & Bernd Huber, 2000. "The Optimal Taxation of Dividends in a Small Open Economy," CESifo Working Paper Series 348, CESifo.
    4. P Krugman & Anthony J. Venables, 1993. "Intergration," CEP Discussion Papers dp0172, Centre for Economic Performance, LSE.
    5. Hartman, David G., 1985. "Tax policy and foreign direct investment," Journal of Public Economics, Elsevier, vol. 26(1), pages 107-121, February.
    6. Sorjonen, Pasi, . "Essays on Dividends and Taxes," ETLA A, The Research Institute of the Finnish Economy, number 30.
    7. 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.
    8. 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.
    9. Hans‐Werner Sinn, 1984. "Die Bedeutung des Accelerated Cost Recovery System für den internationalen Kapitalverkehr," Kyklos, Wiley Blackwell, vol. 37(4), pages 542-576, November.
    10. Mervyn A. King, 1974. "Taxation and the Cost of Capital," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(1), pages 21-35.
    11. Sinn, Hans-Werner, 1984. "Die Bedeutung des Accelerated Cost Recovery System fur den internationalen Kapitalverkehr. (The Significance of the Accelerated Cost Recovery System for International Capital Movements. With English s," Kyklos, Wiley Blackwell, vol. 37(4), pages 542-576.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Seppo Kari & Jouko Ylä-Liedenpohja, 2004. "Cost of Capital for Cross-Border Investment: The Fallacy of Estonia as a Tax Haven," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 5(1), pages 28-43, December.
    2. Bhavish Jugurnath & Mark Stewart & Robert Brooks, 2008. "Dividend taxation and corporate investment: a comparative study between the classical system and imputation system of dividend taxation in the United States and Australia," Review of Quantitative Finance and Accounting, Springer, vol. 31(2), pages 209-224, August.
    3. Hakelberg, Lukas & Rixen, Thomas, 2020. "Is Neoliberalism Still Spreading? The Impact of International Cooperation on Capital Taxation," SocArXiv tvneu, Center for Open Science.
    4. Jouko Ylä-Liedenpohja, 2003. "Taxation and Valuation of International Real Investments," CESifo Working Paper Series 1013, CESifo.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jarkko Harju & Seppo Kari, 2017. "Dividend Taxes and Decisions of MNEs: Evidence from a Finnish Tax Reform," CESifo Economic Studies, CESifo Group, vol. 63(1), pages 45-77.
    2. Dickescheid, Thomas, 2002. "Steuerwettbewerb und Direktinvestitionen," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 16, number urn:isbn:9783161477348, December.
    3. Harendt, Christoph & Dreßler, Daniel & Overesch, Michael, 2016. "The Impact of Tax Treaties and Repatriation Taxes on FDI Revisited," VfS Annual Conference 2016 (Augsburg): Demographic Change 145588, Verein für Socialpolitik / German Economic Association.
    4. Sorensen, Peter Birch, 1995. "Changing Views of the Corporate Income Tax," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(2), pages 279-294, June.
    5. Sorensen, Peter Birch, 1995. "Changing Views of the Corporate Income Tax," National Tax Journal, National Tax Association, vol. 48(2), pages 279-94, June.
    6. Michael P. Devereux & Peter Birch Sørensen, 2006. "The Corporate Income Tax: international trends and options for fundamental reform," European Economy - Economic Papers 2008 - 2015 264, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    7. Jespersen, Jesper, 2005. "Debat og kommentarer: Keynes-inspireret makroøkonomisk teori," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2005(1), pages 104-121.
    8. Abildgren, Kim, 2005. "Interest-Rate Development in Denmark 1875-2003 – A Survey," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2005(1), pages 153-167.
    9. Hansen, Lars Gårn & Krarup, Signe, 2005. "Bør virksomheder oplyses om sandsynligheden for kontrol?," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2005(1), pages 43-64.
    10. Seppo Kari & Jouko Ylä-Liedenpohja, 2005. "Effects of an Equalization Tax on Multinational Investments and Transfer Pricing," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(1), pages 45-61, March.
    11. Bentzen, Jan & Smith, Valdemar, 2005. "Short-run and long-run relationships in the consumption of alcohol in the Scandinavian countries," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2005(1), pages 65-80.
    12. Reuven Avi-Yonah, "undated". "The Pitfalls of International Integration: A Comment on the Bush Proposal and Its Aftermath," University of Michigan John M. Olin Center for Law & Economics Working Paper Series umichlwps-1007, University of Michigan John M. Olin Center for Law & Economics.
    13. Peter Birch Sørensen, 2006. "Can Capital Income Taxes Survive? And Should They?," EPRU Working Paper Series 06-06, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    14. Andersen, Torben M. & Pedersen, Lars Haagen, 2005. "Debatten om fremtidens velfærd - Demografi, velstandsdilemma og makroøkonomiske strategier," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2005(1), pages 189-229.
    15. Andersen, Jørgen Goul, 2005. "Splinten og bjælken," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2005(1), pages 258-264.
    16. Sørensen, Peter Birch, 2005. "Taxation of shareholder income and the cost of capital in an open economy: theory and applications to the Nordic countries," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2005(1), pages 433-447.
    17. Jespersen, Jesper, 2005. "Makroøkonomisk analyse, finanspolitisk holdbarhed og DREAM-modellen: en umage cocktail," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2005(1), pages 243-249.
    18. Dhammika Dharmapala, 2008. "What problems and opportunities are created by tax havens?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 24(4), pages 661-679, winter.
    19. Johannesen, Niels, 2005. "Skattekonkurrence og økonomisk geografi," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2005(1), pages 380-415.
    20. Hans-Werner Sinn, 1991. "Taxation and the Cost of Capital: The "Old" View, the "New" View, and Another View," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 25-54, National Bureau of Economic Research, Inc.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fer:dpaper:266. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anita Niskanen (email available below). General contact details of provider: https://edirc.repec.org/data/vatttfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.