The current debt crisis has given rise to a debate about deeper fiscal integration in Europe. The view is widespread that moving towards a ‘fiscal union’ would increase the ability of the currency union to maintain economic stability in situations where some member states are affected by...

The question of who bears the burden of the corporate income tax is important. In the tax policy debate, this issue is controversial. Proponents of higher taxes on business argue that these taxes mostly fall on firm owners and thus redistribute income from ‘rich to poor’. Critics object that...

In recent years tax havens and offshore financial centres have come under increasing political pressure to cooperate with other countries in matters of taxation and efforts to crowd back tax evasion and avoidance. As a result many tax havens have signed tax information exchange agreements...

In this short paper, we review the criticism of the standard view (the ‘old view’) of foreign profit taxation which goes back to Peggy Musgrave (née Richman, 1963). This ‘new view’ of international taxation is based on recent empirical studies and favours a system where foreign profits...

This paper measures the relative importance of quality and quantity effects of corporate taxation on foreign direct investment. Quantity is affected if corporate taxes reduce the equilibrium stock of foreign capital in a given country. Quality effects arise if taxes decrease the extent to which...

In the debate on the impact of illicit capital flows on developing countries, the view is widespread that profit shifting to low tax jurisdictions undermines the ability of developing countries to raise tax revenue. While the shifting of income out of developed countries is a widely debated...

This note provides a novel argument why countries may have incentives to allow for some profit shifting to low-tax jurisdictions. The reason is that a tightening of transfer pricing policies by high tax countries leads to more aggressive tax rate competition by low tax countries.

The standard tax theory result that investment should not be distorted is based on the assumption that profits are locally bound. In this paper we analyze the optimal tax policy in a model where firms are internationally mobile. We show that the optimal policy response to increasing firm...