Tax Spillovers under Separate accounting and Formula Apportionment

Soren Bo Nielsen, Pascalis Raimondos-Møller () and Guttorm Schjelderup ()

No 2831, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: It is observed in the real world that taxes matter for location decisions and that multinationals shift profits by transfer pricing. The US and Canada use Formula Apportionment (FA) to tax corporate income, and the EU is debating a switch from Separate Accounting (SA) to FA. This paper develops a theoretical model that compares basic properties of FA to SA. The focal point of the analysis is on how changes in tax rates affect capital formation, input choice, and transfer pricing as well as spillovers on tax revenue in other countries. The analysis shows that a move from SA to FA will not eliminate such spillovers and will, in cases identified in the paper, actually aggravate them.

Keywords: Formula Apportionment; Separate Accounting; Tax Externalities; Transfer Prices (search for similar items in EconPapers)
JEL-codes: F23 H23 (search for similar items in EconPapers)
Date: 2001-06
View citations in EconPapers

Downloads: (external link)
http://www.cepr.org/pubs/dps/DP2831.asp (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Tax Spillovers under Separate Accounting and Formula Apportionment
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:cpr:ceprdp:2831

Ordering information: This working paper can be ordered from
http://www.cepr.org/pubs/dps/DP2831.asp

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 53--56 Great Sutton Street, London EC1V 0DG
Series data maintained by ().