This paper analyses fiscal competition between two countries in a model where firms operating in imperfectly competitive markets may offshore their production to a low-cost third country. We show that this kind of cost-induced offshoring may have two externalities on the other country's welfare....

In this paper we ask whether recent claims that the US government should switch from the tax credit system to the exemption system are justified. We study corporate taxation in a model where international capital flows are either greenfield investment projects or acquisitions of existing firms,...

We introduce transport cost of trade in products into the classical Zodrow and Mieszkowski (1986) model of capital tax competition. It turns out that even small levels of transport cost lead to a complete breakdown of the seminal result, the underprovision of public goods. Instead, there is a...

The key challenge for the fiscal reform of the eurozone is not better fiscal policy coordination or supervision. It is this: • Make sure that the financial sector can absorb a sovereign bankruptcy without a financial meltdown. This requires much tighter regulation, more effective supervision,...

This paper attempts to reconcile in a unified framework different approaches to the question of the optimal taxation of foreign source income. The main finding of the analysis is that the key variables are (i) whether there is full or limited de-ductibility of capital expenses, and (ii) how...

The aim of this paper is to establish whether jurisprudence of the Court of Justice of the European Union (CJ) on corporate tax leads to a more level playing field and increased tax neutrality within the European Internal Market. It uses two rulings as case studies to demonstrate how the...