Evaluating tax policy for location decisions

Devereux, Michael and Griffith, Rachel (2003) Evaluating tax policy for location decisions. International Tax and Public Finance, 10 (2). pp. 107-126.

Abstract

We consider the impact of taxation when investors face a discrete choice between two or more mutually exclusive projects; in particular we consider the location choice of multinationals. Such choices depend on an effective average tax rate. We propose a precise measure of this rate, which is shown to be equal to a weighted average of an effective marginal tax rate and an adjusted statutory tax rate, where the weights depend on the profitability of the investment. Estimates of the distribution of this measure are presented and compared for domestic and international investment in the USA, France, Germany and the UK. We analyse the impact of harmonising corporate tax rates in Europe on incentives to locate in France, Germany and the UK.

Item Type: Article
Keywords: Effective tax rates; Discrete investment; Tax rates; Multinational corporations; Fiscal policy; Mathematical models
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 26 Feb 2012 15:56
Last Modified: 23 Oct 2015 14:07
URI: http://eureka.sbs.ox.ac.uk/id/eprint/2636

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