Asymmetric Tax Competition with Formula Apportionment
AbstractThis paper analyzes asymmetric tax competition under formula apportionment. It sets up a model with multinationals where two welfare-maximizing jurisdictions of different size levy source-based corporate taxes and allocate taxes using the formula approach. At the Nash equilibrium, tax rates are too low and public goods quantities are too small. The paper shows that the larger country levies a larger tax rate compared to the smaller country as it does under separate accounting. Citizens of the larger country are worse off than those of the smaller country.
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Bibliographic InfoPaper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 200943.
Length: 17 pages
Date of creation: 2009
Date of revision:
Publication status: Forthcoming in
Multinational enterprises; corporate taxation; formula apportionment; asymmetric tax competition.;
Find related papers by JEL classification:
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
- H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
This paper has been announced in the following NEP Reports:
- NEP-ACC-2009-11-14 (Accounting & Auditing)
- NEP-ALL-2009-11-14 (All new papers)
- NEP-PBE-2009-11-14 (Public Economics)
- NEP-PUB-2009-11-14 (Public Finance)
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