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A Note on the Taxation of International Capital Income Flows


  • Bruce, Neil


Seemingly persuasive arguments can be made to suggest that income from foreign-owned capital should be taxed by a small open economy and that it should not be taxed. The author shows that the case for taxing foreign capital income as part of an "optimal" tax scheme rests on the assumption that tax rates on other forms of income are not set optimally. In particular, if economic profit is not fully taxed, a tax on foreign capital income should not be taxed by the capital-importing country. Copyright 1992 by The Economic Society of Australia.

Suggested Citation

  • Bruce, Neil, 1992. "A Note on the Taxation of International Capital Income Flows," The Economic Record, The Economic Society of Australia, vol. 68(202), pages 217-221, September.
  • Handle: RePEc:bla:ecorec:v:68:y:1992:i:202:p:217-21

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    References listed on IDEAS

    1. R. Quentin Grafton & Leif K. Sandal & Stein Ivar Steinshamn, 2000. "How to Improve the Management of Renewable Resources: The Case of Canada's Northern Cod Fishery," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(3), pages 570-580.
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    4. Boersma, P. Dee & Parrish, Julia K., 1999. "Limiting abuse: marine protected areas, a limited solution," Ecological Economics, Elsevier, vol. 31(2), pages 287-304, November.
    5. Caddy, J. F. & Gulland, J. A., 1983. "Historical patterns of fish stocks," Marine Policy, Elsevier, vol. 7(4), pages 267-278, October.
    6. Sanchirico, James N. & Wilen, James E., 2001. "A Bioeconomic Model of Marine Reserve Creation," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 257-276, November.
    7. Gaspar, Jess & L. Judd, Kenneth, 1997. "Solving Large-Scale Rational-Expectations Models," Macroeconomic Dynamics, Cambridge University Press, vol. 1(01), pages 45-75, January.
    8. Alp E. Atakan, 2003. "Stochastic convexity in dynamic programming," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(2), pages 447-455, September.
    9. Sanchirico, James N. & Wilen, James E., 1999. "Bioeconomics of Spatial Exploitation in a Patchy Environment," Journal of Environmental Economics and Management, Elsevier, vol. 37(2), pages 129-150, March.
    10. Pezzey, John C. V. & Roberts, Callum M. & Urdal, Bjorn T., 2000. "A simple bioeconomic model of a marine reserve," Ecological Economics, Elsevier, vol. 33(1), pages 77-91, April.
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    Cited by:

    1. Koskela, Erkki & Schob, Ronnie, 2002. " Optimal Factor Income Taxation in the Presence of Unemployment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 387-404.
    2. Huizinga, Harry & Nielsen, Soren Bo, 1997. "Capital income and profit taxation with foreign ownership of firms," Journal of International Economics, Elsevier, vol. 42(1-2), pages 149-165, February.
    3. Huizinga, Harry & Nielsen, Soren Bo, 2002. "The coordination of capital income and profit taxation with cross-ownership of firms," Regional Science and Urban Economics, Elsevier, vol. 32(1), pages 1-26, January.
    4. Andreas Haufler, 1996. "Optimal factor and commodity taxation in a small open economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(3), pages 425-442, July.
    5. Harry Huizinga & Søren Bo Nielsen, "undated". "The Political Economy of Capital Income and Profit Taxation in a Small Open Economy," EPRU Working Paper Series 97-01, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    6. Slemrod, Joel & Hansen, Carl & Procter, Roger, 1997. "The seesaw principle in international tax policy," Journal of Public Economics, Elsevier, vol. 65(2), pages 163-176, August.
    7. Yong Yang, 1998. "International Taxation When Domestic Distributional Policy is Constrained," International Economic Journal, Taylor & Francis Journals, vol. 12(1), pages 75-93.
    8. Erkki Koskela & Ronnie Schöb, 1998. "Why Governments should Tax Mobile Capital in the resence of Unemployment," CESifo Working Paper Series 175, CESifo Group Munich.
    9. Mackie James & J. Rousslang Donald, 2000. "The Optimal Taxation of Income From International Investment: A Geometric Analysis," International Economic Journal, Taylor & Francis Journals, vol. 14(4), pages 77-86.

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