Why is There Corporate Taxation in a Small Open Economy?

Released on by Roger H. Gordon
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  • Why is There Corporate Taxation in a Small Open Economy? Book Detail

  • Author : Roger H. Gordon
  • Release Date : 1994
  • Publisher :
  • Genre : Corporations
  • Pages : 22
  • ISBN 13 :
  • File Size : 87,87 MB
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Why is There Corporate Taxation in a Small Open Economy? by Roger H. Gordon PDF Summary

Book Description: Several recent papers argue that corporate income taxes should not be used by small, open economies. With capital mobility, the burden of the tax falls on fixed factors (e.g., labor), and the tax system is more efficient if labor is taxed directly. However, corporate taxes not only exist but rates are roughly comparable with the top personal tax rates. Past models also forecast that multinationals should not invest in countries with low corporate tax rates, since the surtax they owe when profits are repatriated puts them at a competitive disadvantage. Yet such foreign direct investment is substantial. We suggest that the resolution of these puzzles may be found in the role of income shifting, both domestic (between the personal and corporate tax bases) and cross-border (through transfer pricing). Countries need cash-flow corporate taxes as a backstop to labor taxes to discourage individuals from converting their labor income into otherwise untaxed corporate income. We explore how these taxes can best be modified to deal as well with cross-border shifting.

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Transfer Pricing and Corporate Taxation

Transfer Pricing and Corporate Taxation

File Size : 52,52 MB
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National tax authorities individually determine multinational ?rms’ country-speci?c tax liabilities by applying one or more sanctioned transfer pricing method