Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/186030 
Authors: 
Year of Publication: 
2013
Citation: 
[Journal:] Swiss Journal of Economics and Statistics [ISSN:] 2235-6282 [Volume:] 149 [Issue:] 3 [Publisher:] Springer [Place:] Heidelberg [Year:] 2013 [Pages:] 381-404
Publisher: 
Springer, Heidelberg
Abstract: 
This paper analyzes tax competition when welfare maximizing jurisdictions levy source-based corporate taxes and multinational enterprises choose tax-efficient capital-to-debt ratios. Under separate accounting, multinationals shift debt from low-tax to high-tax countries. The Nash equilibrium of the tax competition game is characterized by underprovision of publicly provided goods. Under formula apportionment, the country-specific capital-to-debt ratio of a multinational's affiliate is independent of the jurisdiction's tax rate. Public good provision is either too large or too small. However, there is clearly underprovision under formula apportionment if the debt externality is not negative.
Subjects: 
Multinational enterprises
financial policy
corporate taxation
tax competition
JEL: 
F23
H25
H42
H73
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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