Company tax reform with a water's edge

• 成果类型: Article
• 署名作者: Riedel, Nadine; Runkel, Marco
• 署名单位: University of Munich
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2006.11.001
• 发表日期: 2007
• 页码: 1533-1554
• 关键词: separate accounting; Formula Apportionment; water's edge

摘要

This paper analyzes the effects of switching from a corporate tax system based on separate accounting (SA) towards a system in which two countries form a formula apportionment (FA) union while a third country sticks to SA (water's edge). Our analysis draws a positive picture on the water's edge regulation. In the short-run, for given tax rates, the transition from SA to FA is likely to reduce profit shifting from the FA union to non-FA tax havens. In a long-run tax competition analysis, we find a negative water's edge externality under FA that tends to be less detrimental than the profit shifting externality under SA and may offset other externalities under FA. (c) 2006 Elsevier B.V. All rights reserved.