Trade and multinationals : the effect of economic integration on taxation and tax revenue
Working paper
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http://hdl.handle.net/11250/162834Utgivelsesdato
2003-12Metadata
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Sammendrag
The rising importance of multinationals in the world economy has been accompanied
by a rise in trade between affiliates of multinationals located in different
countries, and by profits being shifted to low tax countries. The effect of trade barriers
on taxation, intra firm trade and profit shifting has largely been ignored by
both the trade literature and the public finance literature. This paper analyzes how
competition over shifty profits affect tax policy as trade barriers are lowered. The
main results are: (i) A reduction in trade barriers unambiguously leads to higher
tax revenue for low or intermediate levels of trade costs, and (ii) that the effect on
equilibrium tax rates depends on the proportion of the corporate tax bases that is
foreign owned and how far economic integration has proceeded.
Utgiver
Norwegian School of Economics and Business Administration. Department of EconomicsSerie
Discussion paper2004:1