Discussion Papers, Department of Finance and Management Science, Norwegian School of Economics (NHH)
No 2008/4:
Redistributive taxation, multinational enterprises, and economic integration
Andreas Haufler ()
, Alexander Klemm ()
and Guttorm Schjelderup ()
Abstract: Increased activity of multinational firms exposes national
corporate tax bases to cross-country profit shifting, but also leads to
rising profitability of the corporate sector. We incorporate these two
effects of economic integration into a simple political economy model where
the median voter decides on a redistributive income tax rate. In this
setting economic integration may raise or lower the equilibrium tax rate,
and it is more likely to raise the tax rate of a low-tax country. The
implications of the model are consistent with the empirical observations
that effective corporate tax rates have not fallen in all OECD countries,
and that corporate tax revenues have generally risen.
Keywords: Redistributive taxation; profit shifting; (follow links to similar papers)
JEL-Codes: F23; H20; (follow links to similar papers)
14 pages, March 12, 2008
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