Estimating Bargaining-related Tax Advantages of Multinational Firms

Peter Egger, Nora Strecker and Benedikt Zoller-Rydzek

No 6979, CESifo Working Paper Series from CESifo

Abstract: Bargaining power may explain the tax differences between multinational and national enterprises beyond MNEs’ profit shifting. Larger firms (mostly MNEs) are more valuable for tax authorities for various reasons. In threatening relocation, larger firms extract greater deductions, resulting in a regressive ETR schedule and lower ETRs for size-related reasons. MNEs face lower relocation costs than NEs, which enhances their bargaining position. Using French firm-level data and entropy balancing, we find that the regressivity of the French tax schedule reduces MNEs’ ETRs by 2.52 percentage points (size effect), while their relocation threat leads to a 3.58 percentage point reduction.

Keywords: profit taxation; multinational firms; entropy balancing (search for similar items in EconPapers)
JEL-codes: C21 F23 H25 H26 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-eur, nep-int and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp6979.pdf (application/pdf)

Related works:
Journal Article: Estimating bargaining-related tax advantages of multinational firms (2020)
Working Paper: Estimating Bargaining-related Tax Advantages of Multinational Firms (2018)
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: https://EconPapers.repec.org/RePEc:ces:ceswps:_6979

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().