Arbeitspapier
Profit Tax Competition and Formula Apportionment
We analyse tax competition with corporate income taxes in a common market where tax revenues are allocated according to an apportionment formula. Generally, tax competition is sharper (i.e., equilibrium tax rates are lower) the more tax-elastic is the apportionment formula. This depends on the properties of production technologies. In particular: (i) With fixed labour input, tax competition is sharpest if apportionment is based on property-shares, followed by the sales- and payroll-shares. (ii) If capital and labour are endogenous and technologies are Cobb-Douglas, tax competition under the property- and the payroll-share rule is sharper than under the sales-share formula. Factor elasticities determine whether payroll- or property-share apportionment generates sharper tax competition.
- Language
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Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 1011
- Classification
-
Wirtschaft
Firm Behavior: Theory
Criteria for Decision-Making under Risk and Uncertainty
- Subject
-
tax competition
formula apportionment
- Event
-
Geistige Schöpfung
- (who)
-
Pethig, Rüdiger
Wagener, Andreas
- Event
-
Veröffentlichung
- (who)
-
Center for Economic Studies and ifo Institute (CESifo)
- (where)
-
Munich
- (when)
-
2003
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- Pethig, Rüdiger
- Wagener, Andreas
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2003
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