Arbeitspapier

Corporate income taxation of multinationals and unemployment

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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.

Sprache
Englisch

Erschienen in
Series: CESifo Working Paper ; No. 1868

Klassifikation
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

Ereignis
Geistige Schöpfung
(wer)
Eichner, Thomas
Runkel, Marco
Ereignis
Veröffentlichung
(wer)
Center for Economic Studies and ifo Institute (CESifo)
(wo)
Munich
(wann)
2006

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Eichner, Thomas
  • Runkel, Marco
  • Center for Economic Studies and ifo Institute (CESifo)

Entstanden

  • 2006

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