Corporate Income Taxation of Multinationals in a General Equilibrium Model

Thomas Eichner and Marco Runkel ()

No 2320, CESifo Working Paper Series from CESifo

Abstract: This paper contributes to the discussion on Separate Accounting versus Formula Apportionment in the corporate income taxation of multinational enterprises (MNEs). The innovation of the analysis is that we consider a general equilibrium tax competition model with an endogenously determined world interest rate. Under the principle of Separate Accounting, it turns out that corporate tax rates may be inefficiently low or high, while under Formula Apportionment corporate tax rates are always inefficiently low. These results are true independent of whether the number of countries is small or large. They reverse the insights obtained by previous studies under the assumption of an exogenously given world interest rate.

Keywords: corporate income tax; Separate Accounting; Formula Apportionment (search for similar items in EconPapers)
JEL-codes: H70 H73 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Corporate income taxation of multinationals in a general equilibrium model (2011)
Journal Article: Corporate income taxation of multinationals in a general equilibrium model (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2320

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