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Exports, Foreign Direct Investment and the Costs of Corporate Taxation

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  • Christian Keuschnigg

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Abstract

Depending on the definition of the tax base, the statutory corporate tax rate implies rather different measures of effective average and marginal tax rates. This paper develops a model of a monopolistically competitive industry with extensive and intensive business investment and shows how these margins respond to changes in average and marginal corporate tax rates. Intensive investment refers to the size of a firm's capital stock. Extensive investment refers to the firm's production location and reflects the trade-off between exports and foreign direct investment as alternative modes of foreign market access. The paper derives comparative static effects of the corporate tax and shows how the cost of public funds depends on the elasticities of the extensive and intensive investment responses.

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Bibliographic Info

Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2006 with number 2006-17.

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Length: 31 pages
Date of creation: Jul 2006
Date of revision:
Handle: RePEc:usg:dp2006:2006-17

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Keywords: Exports; foreign direct investment; corporate taxation; extensive and intensive investment; costs of public funds;

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References

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  8. repec:rus:hseeco:122439 is not listed on IDEAS
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  10. Christian Keuschnigg, 2008. "Exports, foreign direct investment, and the costs of corporate taxation," International Tax and Public Finance, Springer, vol. 15(4), pages 460-477, August.
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Citations

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Cited by:
  1. Christian Keuschnigg, 2007. "Exports, Foreign Direct Investment and the Costs of Corporate Taxation," FIW Working Paper series 005, FIW.
  2. Christian Keuschnigg & Evelyn Ribi, 2007. "Outsourcing, Unemployment and Welfare Policy," University of St. Gallen Department of Economics working paper series 2007 2007-41, Department of Economics, University of St. Gallen.
  3. Christian Keuschnigg, 2009. "Corporate Taxation and the Welfare State," CESifo Working Paper Series 2557, CESifo Group Munich.
  4. Christian Keuschnigg, 2009. "The Role of Corporate Taxation in a Large Welfare State," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 145(IV), pages 443-452, December.
  5. Keuschnigg, Christian & Keuschnigg, Mirela, 2012. "Transition Strategies In Enacting Fundamental Tax Reform," National Tax Journal, National Tax Association, vol. 65(2), pages 357-85, June Cita.
  6. Christian Keuschnigg & Peter Egger & Wolfgang Eggert & Hannes Winner, 2009. "Corporate Taxation, Debt Financing and Foreign Plant Ownership," University of St. Gallen Department of Economics working paper series 2009 2009-01, Department of Economics, University of St. Gallen.

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