Why pay more? Corporate Tax Avoidance through Transfer Pricing in OECD Countries

This paper presents suggestive evidence of income shifting in response to differences in corporate tax rates for a large selection of OECD countries. We use a new method to disentangle the income shifting effects from the effects of tax rates on real activity. Our baseline estimates suggest that a substantial share of the revenues from a unilateral increase in the corporate tax rate is lost because of a decline in <I>reported</I> income.<P>This discussion paper has resulted in a publication in the <A href="http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V76-458P5BD-1&_user=499884&_coverDate=09%2F30%2F2003&_rdoc=18&_fmt=high&_orig=browse&_srch=doc-info(%23toc%235834%232003%23999129990%23455647%23FLA%23display%23Volume)&_cdi=5834&_sort=d&_docanchor=&_ct=25&_acct=C000024499&_version=1&_urlVersion=0&_userid=499884&md5=fc88a0ee28b0c9591c638e5d473e7b6d"><I>Journal of Public Economics</I></A>, 2003, 87(9-10), 2225-52.