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Asymmetric Tax Competition with Formula Apportionment
This paper analyzes asymmetric tax competition under formula apportionment. It sets up a model with multinationals where two welfare-maximizing jurisdictions of different size levy source-based corporate taxes and allocate taxes using the formula approach. At the Nash equilibrium, tax rates are too...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 43-2009) |
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| Main Author: | |
| Format: | Work |
| Language: | English |
| Published: |
Philipps-Universität Marburg
2009
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | This paper analyzes asymmetric tax competition under formula apportionment. It sets up a model with multinationals where two welfare-maximizing jurisdictions of different size levy source-based corporate taxes and allocate taxes using the formula approach. At the Nash equilibrium, tax rates are too low and public goods quantities are to small. The paper shows that the larger country levies a larger tax rate compared to the smaller country as it does under separate accounting. Citizens of the larger country are worse off than those of the smaller country. |
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| Physical Description: | 17 Pages |
| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0024 |