The choice of apportionment factors under formula apportionment

Arbeitspapier

This paper investigates the choice of apportionment factors under a corporate tax system of Formula Apportionment. In contrast to perceived wisdom, we show that the apportionment formula contains both mobile (capital) and immobile (labor) factors if jurisdictions are granted full fiscal autonomy with respect to tax rates and the formula design. A welfare gain can be realized by delegating the decision over apportionment factors to a central planner (centralization), while at the same time allowing jurisdictions fiscal autonomy in setting tax rates. However, the central planner uses the formula as a corrective instrument to internalize fiscal externalities and, therefore, uses mobile apportionment factors as well.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2072

Classification and Topics

• Classification: Wirtschaft ; Business Taxes and Subsidies including sales and value-added (VAT) ; State and Local Taxation, Subsidies, and Revenue ; International Fiscal Issues; International Public Goods
• Subject: Formula Apportionment ; Körperschaftsteuer ; Steuerbemessung ; Multinationales Unternehmen ; Wohlfahrtseffekt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Runkel, Marco ; Schjelderup, Guttorm
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/26117
• Last update: 10.03.2025, 11:42 AM CET