Multinational companies’ ability to pay little corporate income tax has grabbed headlines recently. This column argues that the details of international tax rules matter for macroeconomic performance – especially in low-income countries. This emphasises the importance of the G20–OECD Action Plan on Base Erosion and Profit Shifting. However, dealing properly with tax spillovers will require a deeper global debate about the international tax architecture itself.
Ruud de Mooij, Michael Keen, Victoria Perry, 14 September 2014
Agnès Benassy-Quéré, Alain Trannoy, Guntram Wolff, 22 July 2014
Tax harmonisation has been controversial since the establishment of the European Economic Community, and corporation tax proposals are currently on the table in the EU. Although tax competition can be beneficial, tax harmonisation could curb tax competition that leads to the under-provision of public goods or to burden-shifting from mobile to immobile tax bases. As yet, no agreement has been reached on any ambitious harmonisation plan for mobile tax bases. This column explores the possibility of implementing partial tax harmonisation for corporate taxation and the taxation of the banking sector.
Henrik Kleven, Camille Landais, Emmanuel Saez, Esben Schultz, 17 September 2013
How responsive is international migration by high-skilled workers to tax differentials across countries? This column provides evidence from Denmark suggesting that a preferential scheme was highly successful in attracting rich foreigners. It warns that, absent international tax coordination, preferential tax schemes to high-income foreigners could substantially weaken tax progressivity at the top of the distribution.
Assaf Razin, Efraim Sadka, 21 January 2011
Does the free movement of factors of production lure tax authorities into a race to the bottom? This column argues that, when a group of host countries faces an upward supply of immigrants, tax competition does not lead to a race to the bottom; competition may actually lead to higher taxes than tax coordination.
Marius Brülhart, Mario Jametti, 02 November 2007
Opponents of international tax harmonisation argue that tax competition can rein in the tax-raising powers of big-government ‘Leviathans’ and thereby act as a force for good. An analysis of taxation across Swiss municipalities lends support to that argument.