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Internationally Mobile Firms and Tax Policy

Author

Listed:
  • Hagen, K.P.
  • Osmundsen, P.
  • Schjelderup, G.

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.
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Suggested Citation

  • Hagen, K.P. & Osmundsen, P. & Schjelderup, G., 1995. "Internationally Mobile Firms and Tax Policy," Papers 8/95, Norwegian School of Economics and Business Administration-.
  • Handle: RePEc:fth:norgee:8/95
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    Cited by:

    1. 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.
    2. Osmundsen, Petter, 2009. "Time consistency in Petroleum Taxation - The case of Norway," UiS Working Papers in Economics and Finance 2009/18, University of Stavanger.
    3. Vilen Lipatov & Alfons J. Weichenrieder, 2010. "Optimal Income Taxation with Tax Competition," CESifo Working Paper Series 3108, CESifo Group Munich.
    4. Steeve Mongrain & John D. Wilson, 2011. "Tax competition with heterogeneous capital mobility," Working Papers 2011/25, Institut d'Economia de Barcelona (IEB).
    5. Thomas A. Gresik, 2001. "The Taxing Task of Taxing Transnationals," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 800-838, September.
    6. 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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    Keywords

    TAX POLICY; ENTREPRISES;

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