Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26142
Authors: 
Kolmar, Martin
Wagener, Andreas
Year of Publication: 
2007
Series/Report no.: 
CESifo working paper 2097
Abstract: 
The EU Commission is advocating a common consolidated tax base for the corporate income tax, accompanied by a revenue sharing mechanism based on formula apportionment. We analyse tax competition in such a regime, focussing on the interaction between the definition of the tax base and the apportionment method. Tax competition leads to suboptimally low tax rates if and only if the investment elasticity of the tax base is lower than the investment elasticity of the apportionment factor. For any apportionment method a change in the definition of the tax base can turn a race-to-the-bottom in tax competition into a race-over-the-top.
JEL: 
H77
H25
F23
Document Type: 
Working Paper

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