Economic integration and the relationship between profit and wage taxes

Andreas Haufler (), Alexander Daniel Klemm and Guttorm Schjelderup ()

No 810, Working Papers from Oxford University Centre for Business Taxation

Abstract: This paper analyses the development of the ratio of corporate taxes to wage taxes using a simple political economy model with workers and capitalists that own internationally mobile and immobile firms. Among other results, our model predicts that countries reduce their corporate tax rate, relative to the wage tax when preferences for public goods increase, or when a rising share of capital is employed in multinational firms. We further show how a rise in the wage share changes both the relative size of tax bases and the political influence of different income groups. The predicted relationships are tested using panel data for 23 OECD countries for the period 1980 through 2004. The results of the empirical analysis support our main hypotheses.

Keywords: Capital and labour taxes; economic integration; multinational firms (search for similar items in EconPapers)
JEL-codes: H20 H73 F15 F23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int and nep-pbe
Date: 2008
View list of references View citations in EconPapers

Downloads: (external link)
http://www.sbs.ox.ac.uk/centres/tax/Documents/working_papers/WP0810.pdf (application/pdf)

Related works:
Journal Article: Economic integration and the relationship between profit and wage taxes (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:btx:wpaper:0810

Access Statistics for this paper

More papers in Working Papers from Oxford University Centre for Business Taxation
Contact information at EDIRC.
Series data maintained by Simon Loretz ().