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Internationally Mobile Firms and Tax Policy

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  • Guttorm Schjelderup
  • Kare P. Hagen
  • Petter Osmundsen

Abstract

This paper attempts to analyse how the government from a social point of view should handle firms that demand preferential tax treatment on grounds of being internationally mobile. A revelation mechanism is constructed taking into account that migration decisions by firms have negative fiscal effects and also affect national industrial clusters. Some important and seemingly counter intuitive results are: (1) Information rent is acquired by immobile (inefficient) firms, (2) The optimal allocation is implementable within the framework of a corporate income tax system, where mobile firms will selfselect more unfavourable depreciation allowances as compared to immobile firms, and (3) In relative terms, the immobile sector will expand at the expense of the mobile sector.

Suggested Citation

  • Guttorm Schjelderup & Kare P. Hagen & Petter Osmundsen, 1995. "Internationally Mobile Firms and Tax Policy," CESifo Working Paper Series 96, CESifo.
    • Handle: RePEc:ces:ceswps:_96
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    Cited by:

    1. Genser, Bernd & Haufler, Andreas, 1997. "On the optimal tax policy mix when consumers and firms are imperfectly mobile," Discussion Papers, Series II 330, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    2. Peter Egger & Horst Raff, 2015. "Tax rate and tax base competition for foreign direct investment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(5), pages 777-810, October.
    3. Osmundsen, Petter, 2009. "Time consistency in Petroleum Taxation - The case of Norway," UiS Working Papers in Economics and Finance 2009/18, University of Stavanger.
    4. Genser, Bernd & Haufler, Andreas, 1996. "Tax policy and the location decision of firms," Discussion Papers, Series II 306, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    5. Vilen Lipatov & Alfons J. Weichenrieder & Alfons Weichenrieder, 2010. "Optimal Income Taxation with Tax Competition," CESifo Working Paper Series 3108, CESifo.
    6. Steeve Mongrain & John D. Wilson, 2011. "Tax competition with heterogeneous capital mobility," Working Papers 2011/25, Institut d'Economia de Barcelona (IEB).
    7. Thomas A. Gresik, 2001. "The Taxing Task of Taxing Transnationals," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 800-838, September.
    8. Christoph Sauer & Margit Schratzenstaller, 2002. "Strategies Of International Fiscal Competition For Foreign Direct Investment In A Model With Impure Public Inputs," Departmental Discussion Papers 115, University of Goettingen, Department of Economics.

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