Follow you, follow me: public investment under tax competition
Jean Hindriks () and
Yukihiro Nishimura ()
Additional contact information
Yukihiro Nishimura: Graduate School of Economics, Osaka University
No 1, BeFinD Policy Briefs from University of Namur, Department of Economics
The mobility of capital and the presence of multinational firms able to shift profits to tax havens limit the ability of governments to tax capital income and domestic profit. Profit shifting leads to an estimated revenue loss for developing countries that is roughly three times greater than the amount they receive each year in foreign aid (DEVE 2014). In this policy brief, we report recent theoretical research on the interaction between the taxation of multinational corporations and public investment. In our setting, public investment increases the productivity of capital that in turn induces a comparative advantage in the tax-competition. We show that it is preferable for countries to commit first on public investment and then to set taxes.
New Economics Papers: this item is included in nep-pbe
References: Add references at CitEc
Citations Track citations by RSS feed
Downloads: (external link)
http://www.befind.be/briefs/pb1 First version, 2015 (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:nam:befdpb:1
Access Statistics for this paper
More papers in BeFinD Policy Briefs from University of Namur, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Marie-Helene Mathieu ().