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Title:Corporate income taxation of multinationals and fiscal equalization PDF Logo
Authors:Liesegang, Caterina
Runkel, Marco
Issue Date:2009
Series/Report no.:CESifo working paper 2747
Abstract:This paper investigates the effect of fiscal equalization on the efficiency properties of corporate income tax rates chosen by symmetric countries in a Nash tax competition game under the taxation principles of Separate Accounting and Formula Apportionment. Fiscal equalization ensures efficiency if the marginal transfer just reflects the fiscal and pecuniary externalities of tax rates. In contrast to previous studies, tax base equalization (Representative Tax System) does not satisfy this condition, but combining tax revenue and private income equalization does, regardless of which taxation principle is implemented. Under Formula Apportionment, tax base equalization is superior to tax revenue equalization if the wage income externality is sufficiently large.
Subjects:separate accounting
formula apportionment
fiscal equalization
JEL:H25
H71
H77
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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