Heterogeneous firms, 'profit shifting' FDI and international tax competition

• 成果类型: Article
• 署名作者: Krautheim, Sebastian; Schmidt-Eisenlohr, Tim
• 署名单位: University of Oxford; Goethe University Frankfurt
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2010.10.008
• 发表日期: 2011
• 页码: 122-133
• 关键词: Heterogeneous firms; Tax competition; Profit shifting; tax havens

摘要

Larger firms are more likely to use tax haven operations to exploit international tax differences. We study tax competition between a large country and a tax haven. In the large country, heterogeneous firms operate under monopolistic competition and can choose to shift profits abroad. We show that a higher degree of firm heterogeneity (a mean-preserving spread of the cost distribution) increases the degree of tax competition, i.e. it decreases the equilibrium tax rate of the large country, leads to higher outflows of its tax base and thus decreases its equilibrium tax revenues. Similar effects hold for a higher substitutability across varieties. (C) 2010 Elsevier B.V. All rights reserved.