Optimal tax policy when firms are internationally mobile

Becker, Johannes and Fuest, Clemens (2009) Optimal tax policy when firms are internationally mobile. Centre for Business Taxation WP 09/07.

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The standard tax theory result that investment should not be distorted is based on the assumption that profits are locally bound. In this paper we analyze the optimal tax policy in a model where firms are internationally mobile. We show that the optimal policy response to increasing firm mobility may be taxation, subsidization or non-distortion of the marginal investment, depending on whether the mobile firms are more or less profitable than the average firm in the economy. Our findings may contribute to understanding recent tax policy developments in many OECD countries.

Item Type: Other Working Paper
Keywords: Corporate taxes, Optimal Tax Policy, Multinational Firms
Centre: Oxford University Centre for Business Taxation > CBT Working Papers
Date Deposited: 24 May 2012 08:09
Last Modified: 15 Oct 2015 02:18
URI: http://eureka.sbs.ox.ac.uk/id/eprint/3312

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