Global corporate income tax competition, knowledge spillover, and growth

Noritaka Maebayashi and Keiichi Morimoto

European Economic Review, 2024, vol. 164, issue C

Abstract: Using a two-country model of endogenous growth with international knowledge spillovers, this study analyzes the welfare consequences of global corporate income tax competition. Although the Nash equilibrium tax rate can be excessively high or low according to the degree of spillover, this does not lead to significant welfare losses. The key to this outcome is that corporate income tax competition for growth maximization, which we consider hypothetically, attains the maximum growth rate despite complex externalities and strategic interactions.

Keywords: Corporate income tax; Tax competition; Spillover; Economic growth; Welfare (search for similar items in EconPapers)
JEL-codes: E62 F23 F42 H21 H54 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:164:y:2024:i:c:s0014292124000527

DOI: 10.1016/j.euroecorev.2024.104723

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