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Title:Tax Enforcement and Tax Havens under Formula Apportionment PDF Logo
Authors:Becker, Johannes
Fuest, Clemens
Issue Date:2007
Series/Report no.:Finanzwissenschaftliche Diskussionsbeiträge / Finanzwissenschaftliches Forschungsinstitut an der Universität zu Köln 07-8
Abstract:In this paper, we consider optimal tax enforcement policy in the presence of profit shifting towards tax havens. We show that, under separate accounting, tax enforcement levels may be too high due to negative fiscal externalities. In contrast, under formula apportionment, tax enforcement is likely to be too low due to positive externalities of tax enforcement. Our results challenge recent contributions arguing that, under formula apportionment, there is a tendency towards inefficiently high levels of (effective) tax rates.
Subjects:Corporate Taxation
Foreign Direct Investment
JEL:H25
F23
Document Type:Working Paper
Appears in Collections:FiFo Discussion Papers, Finanzwissenschaftliches Forschungsinstitut, Universität Köln

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