Documents tax competition 27 results

"This article reviews the social science literature on tax competition in three steps. The first step is to look at the baseline model of tax competition on which most of the literature implicitly or explicitly builds. The key feature is that governments in a context of open borders will engage in wasteful competition for mobile economic assets and activities through tax reductions. The second step is to focus more closely on tax-induced cross-border mobility. Do tax payers actually shift assets and activities across borders in response to differences in taxation? The main message of the literature is that the scope for tax arbitrage depends crucially on the legal rules governing the taxation of cross-border activities and that the intensity of tax arbitrage varies greatly across different taxes. The final step is to analyze government reactions to tax arbitrage. Do they engage in competitive tax cutting as predicted by the baseline model? The literature discusses various strategies of tax competition and demonstrates that different governments use them to different degrees across different taxes. It also shows, however, that governments increasingly engage in tax cooperation to reign in tax arbitrage and competition. While off to a slow start in the 1960s, tax cooperation has gained momentum in recent years, especially after the financial crisis in 2008. "

"This article provides an overview of the main trends of social and economic developments in the western Balkans. The contribution originates from member inputs from the network of south-east European trade union economic experts operating under the umbrella of the International Trade Union Confederation's Pan-European Regional Council (ITUC-PERC). 1 The contribution focuses on the main social and economic challenges faced by the western Balkans region at a period marked by enduring crises and framed by the prospect of EU accession. In spite of these difficulties, this contribution strives for a comparative overview of economic trends, public finances, unemployment, employee compensation and income inequality in the countries of the western Balkans. The aim is to identify the major challenges for individual countries, but also for the region as a whole in the course of postcrisis consolidation and in the process of European integration, among others, with particular concern for trade union experts and decision-makers. "

"Policy recommendations
• Progress is being made on combating corporation tax avoidance at international level. After a pause pending the results of the 2020 presidential election in the USA, discussions have resumed in an ‘inclusive framework' within the OECD. The recent decisions by the Finance Ministers of the G7 and by the ‘Inclusive framework at the OECD' confirm the political momentum to combat tax avoidance.
• There are two conflicting models: continuing to rely to the utmost on a model that regards the various entities of a multinational group as separate entities, with their tax base set by transfer pricing rules and based on physical presence, or moving over to unitary taxation, with the tax base allocated within the group – and among countries – on the basis of tangible factors, such as jobs or sales. The preferred option is the second one, and the proposals under discussion are a first step in this direction.
• The introduction of a minimum level of taxation is certainly a step forward. However, care must be taken to ensure that the level and scope are right in order to put an end to tax competition, which is detrimental in both economic and budgetary terms. "

"Infolge der Finanz-, Euro- und Staatsschuldenkrise und der öffentlichkeitswirksamen Aufdeckung prominenter Steuerskandale hat die internationale und europäische Steuerpolitik eine hohe politische Priorität. Dieser Beitrag argumentiert, dass die aktuellen Bemühungen zur Bekämpfung des schädlichen Steuerwettbewerb nicht ausreichen, und plädiert für weitergehende Reformen. Es wird zunächst erläutert, wie der Steuerwettbewerb funktioniert und inwieweit er zum Anstieg der Ungleichheit in Europa beigetragen hat. Im Anschluss hieran wird dargelegt, welche Maßnahmen bisher ergriffen wurden, um den Steuerwettbewerb einzudämmen. Es zeigt sich, dass zwar bei der administrativen Kooperation und der Herstellung von Transparenz Fortschritte erzielt wurden, diese aber nicht den allgemeinen Steuerwettbewerb, insbesondere in der Unternehmensbesteuerung, begrenzen können. Der Beitrag schlägt daher vor, eine gemeinsame konsolidierte Körperschaftsteuerbemessungsgrundlage (GKKB) mit Mindeststeuersatz zu schaffen. Nur durch eine gemeinsame Steuerpolitik können die EU-Mitgliedstaaten ihre verteilungspolitische Gestaltungsfähigkeit zurückgewinnen und so die Voraussetzungen für ein soziales Europa schaffen."

"This paper investigates the tax sensitivity of foreign direct investment (FDI) in the context of EU enlargement to Eastern European countries. Using two alternative specifications of a gravity equation, it shows that the E25 is heterogeneous as far as FDI location determinants are concerned. However, the results are at odds with usual consensus:while tax differentials do impact on FDI in the EU15, they are shown to have had no impact on the new member states during the period of analysis (1990-2002). Similarly, other factors such as unit labor costs and price-competitiveness fail to explain FDI inflows to the new EU member states. Simulation exercises run on statutory taxation attend to assess empirically the impact of various tax convergence scenarios. They are shown to imply limited changes in FDI inflows, on the basis of FDI flows and tax differentials observed in 2002."

"In den letzten Jahren war in den meisten Mitgliedsländern der EU ein Erosionsprozess der Körperschaftsteuersätze zu beobachten. Diese Tendenz verstärkte sich durch den Betritt der zehn neuen Mitgliedstaaten. Die Konsequenzen sind ein an Intensität zunehmender Steuerwettbewerb innerhalb der gesamten EU und entsprechende Einnahmenausfälle in den nationalen Haushalten. Allein im Zeitraum von 2001 bis 2005 fiel der durchschnittliche Körperschaftssteuersatz in den EU-15 von 31,9% auf 29,2%. Der Rückgang in den neuen Mitgliedsstaaten (von 26,6% auf 18,5%) fiel noch stärker aus.Als Reaktion auf den zunehmenden Systemwettbewerb erließ die Europäische Kommission einen Code of Conduct, um die einseitige Begünstigung internationaler Unternehmen in den Mitgliedstaaten zu unterbinden. Nicht von dieser Regelung betroffen sind jedoch Steuersysteme, die allen Unternehmen, unabhängig von ihrer Herkunft, dieselben Bedingungen bieten, wie beispielsweise eine nullprozentige Besteuerung von thesaurierten Gewinnen in Estland. Als Konsequenz daraus weiteten die Mitgliedsstaaten ihre Begünstigungen auf die nationalen Unternehmen aus. Die Europäische Kommission beobachtet diese Entwicklung mit Wohlwollen, da der „gesunde Steuerwettbewerb“ durchaus begrüßt wird.Die vorliegende Studie liefert eine Darstellung der Körperschaftsteuersysteme und der damit zusammenhängenden Investitionsbegünstigungen in den zehn neuen Mitgliedstaaten der Europäischen Union. Sie zeigt auch die Gefahr, die der Steuerwettbewerb für das Europäische Sozialmodell darstellt und schildert, welche Maßnahmen auf europäischer Ebene notwendig sind, um dagegen erfolgreich ankämpfen zu können."

"The debate on tax competition lacks due attention when it comes to the provision of public goods used by firms in their production process. Indeed, firms may accept higher corporate taxation provided they enjoy good infrastructure and public services. We quantify such trade-off, i.e. the extent to which a ‘high tax, high public goods' strategy is attractive to capital as compared to a ‘low tax, low public goods' combination. We revisit and develop the popular model of tax competition introduced by Zodrow and Mieszkowski (1986) in a way that allows for the testing of its main prediction. The under-provision of public inputs can be tested econometrically by estimating and comparing two simple elasticities: capital with respect to the tax rate, and capital with respect to public inputs. We regress US foreign direct investment in 18 EU countries over 1994–2003 on several variables, including the corporate tax rate and the stock of public capital, used as a proxy for public input. Based on these estimations (-1.1 for the tax elasticity and +0.2 for the public input elasticity), we conclude that raising public input through an increase in the corporate tax rate reduces inward FDI, and that tax competition may indeed lead to an under-provision of public inputs. Furthermore, a ‘high' equilibrium (high taxation and high level of public input) is not attainable for a country starting from a ‘low' equilibrium unless households have a strong preference for public inputs. On the whole, the impact of tax competition may be more diverse than a mere ‘race to the bottom'."

"Ireland has been an innovator in using taxation as a tool for industrial policy, by attracting foreign direct investment (FDI) with low taxes on corporate profits. This article outlines the background to how this policy evolved and the advantage it was to building up Ireland's industrial base during the 1990s as well as how it contributed to building the ‘Celtic Tiger' economy from 1994 to 2000. It argues that, since EU enlargement in 2004, the advantages of using low corporate tax rates to attract FDI have diminished, even though ‘official' and ‘corporate' Ireland continue to promote this policy and to obstruct any EU-level moves to coordinate corporate tax. The room for manoeuvre is closing and it is argued that Ireland needs to develop alternative strategies and to engage seriously with its EU partners in finding agreement on a common corporate tax base."