Tax Competition and Foreign Capital
Loading...
Date
2001-01-01
Authors
Davies, Ronald B.
Gresik, Thomas A.
Journal Title
Journal ISSN
Volume Title
Publisher
University of Oregon, Dept. of Economics
Abstract
This paper derives welfare equivalence of double taxation rules in a tax competition model with discriminatory home taxes and the ability to finance subsidiary operations with host country capital. For a more general model, we provide sufficient conditions on the number of host sectors and factors that support double-tax-rule equivalence. Examples violating these conditions help identify economic factors under which a home country's has strict preferences over double taxation rules. If the home tax rate can influence host factor prices, the home country weakly prefers deductions over credits as in the pure-home equity financing case.
Description
Keywords
Tax competition, Double taxation, Public economics, Foreign capital