Unilateral tax reform: Border adjusted taxes, cash flow taxes, and transfer pricing

• 成果类型: Article
• 署名作者: Bond, Eric W.; Gresik, Thomas A.
• 署名单位: Vanderbilt University; University of Notre Dame
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2020.104160
• 发表日期: 2020
• 关键词: Border adjustments; Destination-based taxes; Source-based taxes; cash flow taxes; Income taxes; transfer pricing; Unilateral tax reform

摘要

We study the economic effects of unilateral adoption of corporate tax policies that include the choice between destination-based and source-based taxation and between cash flow and income taxes. We utilize a heterogeneous firm model in which monopolistically competitive North firms choose whether to outsource an intermediate good to an unrelated South firm or to produce in a subsidiary in the South. Standard pass through arguments no longer apply because of the income shifting behavior of multinationals and endogenous choice of organizational form. The high tax North country will prefer a destination-based tax over a source-based tax if it adopts a cash flow tax, but whether the cash flow tax is preferred to an income tax will depend on the volume of trade in the differentiated products sector. If the high tax country adopts a destination-based cash flow tax, the low tax country will prefer a destination-based income tax to capture rents from the foreign subsidiaries. (C) 2020 Elsevier B.V. All rights reserved.