 Tax competition in the presence of profit shiftingSteeve Mongrain, David Oh and Tanguy van Ypersele Journal of Public Economics, 2023, vol. 224, issue C Abstract: The popular view is that governments should crack down on tax avoidance by multinational corporations, but in practice, lax anti-profit-shifting policies are common. Here, we analyze how controlling profit shifting influences fiscal competition. Equilibrium tax rates are determined by the elasticities of two components: retained profit and capital mobility. Anti-profit-shifting policies decrease the elasticity of the first, but increase the elasticity of the second. The impact of these policies on equilibrium tax rates is then ambiguous. We show that there are cases in which laxer policies increase equilibrium tax rates and countries’ well-being by favoring investments. We use estimates of different elasticities to show that our model can support lax enforcement. Keywords: Tax competition; Profit shifting; International taxation; Capital mobility (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:224:y:2023:i:c:s0047272723001226 DOI: 10.1016/j.jpubeco.2023.104940 Access Statistics for this article Journal of Public Economics is currently edited by R. Boadway and J. Poterba More articles in Journal of Public Economics from Elsevier |
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