Arbeitspapier
Corporate income taxation of multinationals and unemployment
Within a two-country model with involuntary unemployment, this paper investigates corporate income taxation under separate accounting versus formula apportionment. In contrast to separate accounting, under formula apportionment the corporate tax policy causes a fiscal externality which goes back to unemployment. This unemployment externality is the lowest when the apportionment formula does not contain a payroll factor. It tends to compensate other externalities such that tax rates become inefficiently low. In an empirical calibration, we show that the transition from separate accounting to formula apportionment improves welfare and reduces unemployment. The welfare increase is the strongest under a pure sales formula.
- Language
-
Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 1868
- Classification
-
Wirtschaft
Business Taxes and Subsidies including sales and value-added (VAT)
State and Local Taxation, Subsidies, and Revenue
Mobility, Unemployment, Vacancies, and Immigrant Workers: General
- Event
-
Geistige Schöpfung
- (who)
-
Eichner, Thomas
Runkel, Marco
- Event
-
Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
-
2006
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Eichner, Thomas
- Runkel, Marco
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2006
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