Optimality Properties of Alternative Systems of Taxation of Foreign Capital Income

Jack Mintz and Henry Tulkens

Chapter Chapter 21 in Public goods, environmental externalities and fiscal competition, 2006, pp 507-532 from Springer

Abstract: Abstract Foreign source capital income taxes are examined from the point of view of optimal taxation. In the framework of a simple economy with international real capital flows, a taxonomy of alternative systems of such taxation is first presented, showing how crediting and other tax parameters induce what are called source-based, residence-based and related systems. Next, tax rates are determined that are optimal from a single country’s point of view, given those of the others. The achievability of these rates under the various systems is analyzed. Finally, tax rates that are optimal from an international point of view are considered. Again, achievability of an international optimum under the various systems is considered, leading to the main conclusions that (i) a pure residence-based system in all countries can achieve an international fiscal optimum; (ii) it cannot, however, be sustained as an equilibrium.

Keywords: Foreign Firm; Foreign Multinational; Fiscal Competition; International Optimum; Fiscal Externality (search for similar items in EconPapers)
Date: 2006
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Related works:
Journal Article: Optimality properties of alternative systems of taxation of foreign capital income (1996)
Working Paper: Optimality properties of alternative systems of taxation of foreign capital income (1996)
Working Paper: Optimality Properties of Alternative Systems of Taxation of Foreign Capital Income (1994)
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DOI: 10.1007/978-0-387-25534-7_25

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