Using a large data set of European firms, this paper provides evidence that operations at multinational headquarters are significantly more profitable than operations at their foreign subsidiaries. The effect turns out to be robust and quantitatively large. Our findings suggest that the...

Firms' tax planning decisions, similar to their other operational decisions, are made in a competitive environment. Various stakeholders observe the tax payments and evaluate these against the relevant peer group, which creates interdependencies in the tax planning activities of firms....

This paper investigates how dividend taxes influence portfolio choices, using the response to the distinctive treatment of a subset of foreign dividends in the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) of 2003. An open-economy after-tax capital asset pricing model is used to derive...

To prevent profit shifting by manipulation of transfer prices, tax authorities typically apply the arm’s length principle in corporate taxation and use comparable market prices to ‘correctly’ assess the value of intracompany trade and royalty income of multinationals. We develop a model of...

The aim of this paper is to establish whether VAT place of supply rules are more effective allocation rules than international tax rules currently governing income taxation. This is done through the analysis of the “place where the activity is effectively carried out” (PWAECO) and the...

Many states in the US have in recent years changed the mix of state and local revenue sources used to finance local public expenditures, especially primary and secondary education, with local property taxes being replaced by various sources of state tax revenue. This article examines the...

This paper analyses the development of the ratio of corporate taxes to wage taxes using a simple political economy model with workers and capitalists that own internationally mobile and immobile firms. Among other results, our model predicts that countries reduce their corporate tax rate,...

This paper computes (marginal and average) forward-looking effective tax rates for a sample of more than 550,000 firms in and outside of Europe using Bureau van Dijk's ORBIS data-base. Comparing the firm-level effective tax rates with their country-level counterparts we arrive at two important...

Using a large international firm-level data set, we estimate separate effects of host and parent country taxation on the location decisions of multinational firms. Both types of taxation are estimated to have a negative impact on the location of new foreign subsidiaries. In fact, the impact of...

This paper examines Canadian corporate income tax policy, focusing on the implications of international capital mobility, international tax competition – including the need for a corporate tax structure that is competitive with respect to the United States and other competing economies – and...