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Corporate Income Tax and Economic Distortions

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  • Gaëtan Nicodème

Abstract

As any non-lump-sum tax, corporate income taxation creates distortions in economic choices, reducing its efficiency. This paper reviews some of these domestic and international distortions and their most recent estimates from the economic literature. Distortions originating from income shifting between capital and labour sources, profit shifting across jurisdictions, the effects of taxation on business location and foreign direct investment are the major sources of distortions.

Suggested Citation

  • Gaëtan Nicodème, 2008. "Corporate Income Tax and Economic Distortions," Working Papers CEB 08-033.RS, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:08-033
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    References listed on IDEAS

    as
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    Cited by:

    1. European Commission, 2011. "Tax Reforms in EU Member States 2011: tax policy challenges for economic growth and fiscal sustainability," Taxation Papers 28, Directorate General Taxation and Customs Union, European Commission.
    2. Zodrow, George R. & Diamond, John W., 2013. "Dynamic Overlapping Generations Computable General Equilibrium Models and the Analysis of Tax Policy: The Diamond–Zodrow Model," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.),Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 743-813, Elsevier.
    3. Doris Prammer, 2011. "Quality of taxation and the crisis: Tax shifts from a growth perspective," Taxation Papers 29, Directorate General Taxation and Customs Union, European Commission.
    4. Agus Sholikhan Yulianto & Anis Chariri, 2019. "The Role of Indonesian Tax Reform in Boosting Export Performance of Manufacturing Sectors," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 343-352.

    More about this item

    Keywords

    Corporate taxation; distortions; tax efficiency.;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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