Optimal tax policy when firms are internationally mobile

The standard tax theory result that investment should not be distorted is based on the assumption that profits are locally bound. In this paper we analyze the optimal tax policy when firms are internationally mobile. We show that the optimal policy response to increasing firm mobility may be taxation, subsidization or non-distortion of investment depending on whether the mobile firms are more or less profitable than the average firm in the economy. Our findings may contribute to understanding recent tax policy developments in many OECD countries.

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Year of publication:	2005
Authors:	Becker, Johannes ; Fuest, Clemens
Publisher:	Munich : Center for Economic Studies and Ifo Institute (CESifo)
Subject:	Unternehmensbesteuerung \| Optimale Besteuerung \| Direktinvestition \| Internationale Kapitalmobilität \| Theorie \| Steuerreform \| OECD-Staaten \| corporate taxes \| optimal tax policy

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Series:	CESifo Working Paper ; 1592
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	503747777 [GVK] hdl:10419/19056 [Handle]
Classification:	H21 - Efficiency; Optimal Taxation ; H25 - Business Taxes and Subsidies
Source:	EconStor