Tariff Jumping Foreign Investment and Capital Taxation

Vivek Dehejia (vivek.dehejia@carleton.ca), Alfons J. Weichenrieder and Alfons Weichenrieder
Authors registered in the RePEc Author Service: Alfons J. Weichenrieder

No 260, CESifo Working Paper Series from CESifo

Abstract: This paper reconsiders the welfare effects of "tariff jumping" direct investment if mobile capital is subjected to taxation. In contrast to the conventional wisdom, the receiving country may in this case gain from the incremental inflow of capital, as this diverts tax revenues from the rest of the world. In the case of perfect capital mobility, this possibility becomes a certainty. Our argument provides one rationale for a small country to levy a distorting tariff in a second best world in which capital taxes already exist.

Keywords: Capital taxation; tariff jumping; foreign direct investment (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Tariff jumping foreign investment and capital taxation (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_260

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