Capital Flight and Tax Competition: Are there Viable Solutions to Both Problems

Alberto Giovannini and James Hines

No 416, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper discusses a model corporate tax system based on the application of the residence principle. This tax system, while preserving national sovereignties, minimizes the distortions arising from international capital mobility. The paper is motivated by an analysis of European capital income tax systems, and of the distortions that might arise as obstacles to international capital flows diminish. The alternative system that we analyse has two main properties: it exploits the territoriality of law enforcement, and it allows countries to set the corporate tax rate -- and the extent of double taxation of corporate income -- independently.

Keywords: Corporate Income Tax; Foreign Direct Investment; Foreign Tax Credit; International Capital Mobility (search for similar items in EconPapers)
Date: 1990-05
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Citations: View citations in EconPapers (13)

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Related works:
Working Paper: CAPITAL FLIGHT AND TAX COMPETITION: ARE THERE VIABLE SOLUTIONS TO BOTH PROBLEMS? (1990)
Working Paper: Capital Flight and Tax Competition: Are There Viable Solutions to Both Problems? (1990)
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