We study the optimal combination of corporate tax rate and tax base in a model of a small open economy with heterogeneous firms. We show that it is optimal for the small country's government to effectively subsidize capital inputs by granting a tax allowance in excess of the true costs of...

Since its conception, some within the European Union have expressed concerns over the ability of multinationals to avoid taxation by undertaking transfer pricing to shift profits towards low tax locations. These concerns have been growing, leading to a renewed call for a common consolidated...

Heterogeneous firm productivity seems to provide an argument for governments to pursue `pick-the-winner' strategies by subsidizing highly productive firms more, or taxing them less, than their less productive counterparts. We appraise this argument by studying the optimal choice of effective tax...

Setting minimum tax rates is a well discussed way of mitigating pressure from tax competition. This paper investigates which motives shape the support for a minimum corporate tax among politicians. We make use of a unique data base: a survey among members of the European parliament. Our results...

This paper studies the effects of political factors, mainly partisanship, on corporate taxes in the past 30 years - a period of intensifying competitive pressure in Europe. Extending the Zodrow-Mieszkowski model by decision-makers who have ideological preferences yields the hypothesis that...

In this paper we analyze the implications for the national provision of public inputs when pro t shifting is possible, albeit costly, for internationally integrated firms. In this case a high level of public infrastructure will attract real investment, but the rm can at least partly avoid to pay...

Der vorliegende Aufsatz untersucht unter anderem die Effekte zweier klassischer Prinzipien der internationalen Kapitalbesteuerung auf die Gerechtigkeit und die Effizienz: das Bestimmungslandund das Ursprungslandprinzip. Weiterhin werden die Harmonisierungs- und die Steuerwettbewerbspolitik in...

The discussion about income versus consumption as the ideal tax base looks back on a long history. In recent years, the debate about income versus consumption as the better tax base reemerged in the United States (2002) and in Germany (2006). In view of the long history of the debate, it is...

This paper examines the flexibility of multinational firms to use income-shifting strategies within a tax year to react to operating losses. First, we develop an analytical model that considers how affiliate losses can be adjusted by using the transfer prices of tangible and intangible assets,...

Corporate tax rates around the world have considerably decreased in the last decades. While tax competition among countries has been widely accepted as the driving force of this trend, it has remained unclear which countries compete with whom. This paper focuses on country size as a determinant...