The Tax Elasticity of Financial Statement Income: Implications for Current Reform Proposals

Dhammika Dharmapala

No 8534, CESifo Working Paper Series from CESifo

Abstract: Current reform proposals in international and corporate tax (most notably the OECD’s GloBE proposal) envisage taxing financial statement income. This paper develops a conceptual framework – based on the literature on the elasticity of taxable income – for the welfare analysis of such proposals, and discusses the available evidence on the tax elasticity of financial statement income. The central conclusion is that the most relevant evidence suggests a large responsiveness of financial statement income to taxes (and hence, albeit with significant limitations and caveats, arguably a large deadweight loss). The paper also highlights the need for more evidence on this question.

Keywords: international taxation; multinational firms; financial statement income; book-tax conformity (search for similar items in EconPapers)
JEL-codes: H25 M41 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: The Tax Elasticity of Financial Statement Income: Implications for Current Reform Proposals (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8534

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