Tax spillovers under separate accounting and formula apportionment
Working paper
Permanent lenke
http://hdl.handle.net/11250/162944Utgivelsesdato
2001-05Metadata
Vis full innførselSamlinger
- Discussion papers (SAM) [647]
Sammendrag
It is observed in the real world that taxes matter for location decisions
and that multinationals shift profits by transfer pricing. The US and Canada
use Formula Apportionment (FA) to tax corporate income, and the EU is
debating a switch from Separate Accounting (SA) to FA. This paper develops
a theoretical model that compares basic properties of FA to SA. The focal
point of the analysis is on how changes in tax rates affect capital formation,
input choice, and transfer pricing as well as spillovers on tax revenue in other
countries. The analysis shows that a move from SA to FA will not eliminate
such spillovers and will, in cases identified in the paper, actually aggravate them.
Utgiver
Norwegian School of Economics and Business Administration. Department of EconomicsSerie
Discussion paper2001:9