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Corporate Income Tax and Economic Distortions

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  • Gaetan Nicodeme

    ()
    (European Commission)

Abstract

As any non-lump-sum tax, corporate income taxation creates distortions in economic choices, reducing its efficiency. This paper reviews some of these domestic and international distortions and their most recent estimates from the economic literature. Distortions originating from income shifting between capital and labour sources, profit shifting across jurisdictions, the effects of taxation on business location and foreign direct investment are the major sources of distortions.

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File URL: http://ec.europa.eu/taxation_customs/resources/documents/taxation/gen_info/economic_analysis/tax_papers/taxation_paper_15_en.pdf
File Function: final version, 2009
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Bibliographic Info

Paper provided by Directorate General Taxation and Customs Union, European Commission in its series Taxation Papers with number 15.

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Length: 19 pages
Date of creation: Apr 2009
Date of revision:
Publication status: Published in Bulletin de Documentation du SPF Finances, 68(3): 91-106.
Handle: RePEc:tax:taxpap:0015

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Web page: http://ec.europa.eu/taxation_customs/index_en.htm
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Keywords: European Union; Corporate taxation; distortions; tax efficiency;

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Citations

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Cited by:
  1. European Commission, 2011. "Tax Reforms in EU Member States 2011: tax policy challenges for economic growth and fiscal sustainability," Taxation Papers 28, Directorate General Taxation and Customs Union, European Commission.
  2. Zodrow, George R. & Diamond, John W., 2013. "Dynamic Overlapping Generations Computable General Equilibrium Models and the Analysis of Tax Policy: The Diamond–Zodrow Model," Handbook of Computable General Equilibrium Modeling, Elsevier.
  3. Doris Prammer, 2011. "Quality of taxation and the crisis: Tax shifts from a growth perspective," Taxation Papers 29, Directorate General Taxation and Customs Union, European Commission.

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