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| Tekijä: | Devereux, M.P. Lockwood, B. Redoano, M. |
| Otsikko: | Do countries compete over corporate tax rates? |
| Lehti: | Journal of Public Economics
2008 : JUN, VOL. 92:5-6, p. 1210-1235 |
| Asiasana: | company taxation competition OECD models |
| Kieli: | eng |
| Tiivistelmä: | This paper examines whether OECD countries compete with each other over corporation taxes, and whether such competition can explain the fall in statutory tax rates (herein as: s-t-rts.) in the 1980s and 1990s. A model is developed in which multinational firms (MNEs) choose their capital stock in response to an effective marginal tax rate (EMTR) with at the same time choosing the location of their profit in response to differences in st-t-rts. Governments engage in two-dimensional tax competition: they simultaneously compete over EMTRs for capital and over statutory rates for profit. The parameters of their reaction functions are estimated using data from 21 countries from 1982 to 1999. There is found evidence that countries compete over both measures, and furthermore, that the estimated slopes of reaction functions are consistent with this paper's theoretical predictions. It is found that evidence of strategic interaction is present only btw. open economies. The Nash equilibrium average statutory rates implied by the empirical model fall substantially over the period, in line with falls in actual statutory rates. The reductions in equilibrium tax rates can be explained nearly entirely by more intense competition generated by the relaxation of capital controls. |
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