Increased efficiency through consolidation and formula apportionment in the European Union?
This paper assesses the efficiency properties of recent corporation tax reform proposals of the European Union to introduce international loss consolidation and formula apportionment. We extend the effective tax rate methodology of Devereux and Griffith (1999) to allow for a potential loss and use a large firm level data set to identify the distortions under the current system and following proposed tax reforms. We assess the efficiency of the overall tax system using the two concepts of capital export neutrality and market neutrality. Allowing international loss consolidation in the current system would signify a movement away from both notions of efficiency. A common consolidated tax base with formula apportionment system would move the system towards market neutrality, while improving capital export neutrality only little.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: Park End Street, Oxford OX1 1HP UK|
Phone: +44 (0)1865 288800
Fax: +44 (0)1865 288805
Web page: http://www.sbs.ox.ac.uk/ideas-impact/tax/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael Keen & David Wildasin, 2004. "Pareto-Efficient International Taxation," American Economic Review, American Economic Association, vol. 94(1), pages 259-275, March.
- Michael P Devereux & Simon Loretz, 2007.
"The Effects of EU Formula Apportionment on Corporate Tax Revenues,"
0706, Oxford University Centre for Business Taxation.
- Michael P. Devereux & Simon Loretz, 2008. "The Effects of EU Formula Apportionment on Corporate Tax Revenues," Fiscal Studies, Institute for Fiscal Studies, vol. 29(1), pages 1-33, 03.
- Peter Egger & Simon Loretz & Michael Pfaffermayr & Hannes Winner, 2009.
"Firm-specific forward-looking effective tax rates,"
International Tax and Public Finance,
Springer;International Institute of Public Finance, vol. 16(6), pages 850-870, December.
- Thomas Horst, 1980. "A Note on the Optimal Taxation of International Investment Income," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 793-798.
- Edwards Jeremy, 2005. "Gains from Trade in Government Revenue and Pareto-Efficient International Taxation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-25, December.
- Devereux, Michael P. & Griffith, Rachel, 2002.
"Evaluating Tax Policy for Location Decisions,"
CEPR Discussion Papers
3247, C.E.P.R. Discussion Papers.
- Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production: I--Production Efficiency," American Economic Review, American Economic Association, vol. 61(1), pages 8-27, March.
- Keen, Michael & Piekkola, Hannu, 1997.
" Simple Rules for the Optimal Taxation of International Capital Income,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 99(3), pages 447-61, September.
- Michael Keen & Hannu Piekkola, 1996. "Simple rules for the optimal taxation of international capital income," IFS Working Papers W96/18, Institute for Fiscal Studies.
- Desai, Mihir A. & Hines, James R. Jr., 2003. "Evaluating International Tax Reform," National Tax Journal, National Tax Association, vol. 56(3), pages 487-502, September.
When requesting a correction, please mention this item's handle: RePEc:btx:wpaper:0812. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dongxian Guo)
If references are entirely missing, you can add them using this form.