Allowing firms to choose between separate accounting and formula apportionment taxation

• 成果类型: Article
• 署名作者: Gresik, Thomas A.
• 署名单位: University of Notre Dame
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2016.04.002
• 发表日期: 2016
• 页码: 32-42
• 关键词: separate accounting; Formula Apportionment; Transfer prices; Firm choice

摘要

This paper analyzes the effect on firm behavior and national tax revenues of allowing multinational firms to choose to be taxed under separate accounting rules or an apportionment formula. Separate accounting always generates more profitable output and conditional labor demand distortions from tax differentials while either method can generate a more profitable income-shifting distortion. Both low-cost and high-cost firms can prefer separate accounting while medium-cost firms prefer formula apportionment. With symmetric countries, a firm's preferred method generates greater tax revenues in the country with the lower tax rate. With asymmetric countries, a firm's preferred method need no longer generate greater tax revenues in the lower-tax-rate country due to the fact that countries and firms now value tax base distortions differently. With this misalignment of preferences, some firms can choose the preferred method of both countries at fixed tax rates. (C) 2016 Elsevier B.V. All rights reserved.