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Corporate income tax reforms and international tax competition

Deveraux, M.; Griffith, R; Klemm, A.; (2002) Corporate income tax reforms and international tax competition. Economic Policy , 17 (35) pp. 449-495. 10.1111/1468-0327.00094. Green open access

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Abstract

This paper analyses the development of taxes on corporate income in EU and G7 countries over the last two decades. We establish a number of stylised facts about their development. Tax-cutting and base-broadening reforms have had the effect that, on average across EU and G7 countries, effective tax rates on marginal investment have remained fairly stable, but those on more profitable investments have fallen. We discuss two possible explanations of these stylised facts arising from alternative forms of tax competition. First, governments may be responding to a fall in the cost of income shifting, which puts downward pressure on the statutory tax rate. Second, reforms are consistent with competition for more profitable projects, in particular those earned by multinational firms.

Type: Article
Title: Corporate income tax reforms and international tax competition
Open access status: An open access version is available from UCL Discovery
DOI: 10.1111/1468-0327.00094
Publisher version: http://dx.doi.org/10.1111/1468-0327.00094
Language: English
Additional information: Full-text has the working title "Can international tax competition explain corporate income tax reforms?"
Keywords: JEL classification: F2, H2, H3. Capital income tax, tax competition, multinational firms
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: http://discovery.ucl.ac.uk/id/eprint/15006
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