 |
|
|
|
| ETPF Home | Research | About | Sponsors | Events | Contact |
ETPF Research Main
ETPF Phase 2 The welfare implications of international taxation and tax competition
ETPF Phase 3 International tax and economic welfare
ETPF Research Phase 1
The effects of international taxation on business
1
The effects of international taxation on the activities of multinational
companies: a survey of existing evidence & data sources
2 How are plant location decisions and capital
flows in Europe affected by corporate income taxes?
3 How far do differences in international tax
regimes between countries affect financial policies?
4 Profit shifting within the EU: evidence from
Germany
5 Do non-profit taxes affect the location of
economic activity? Evidence from the EU
6 An economic analysis of ECJ judgements on
corporate income taxes in the EU
1
The effects of international taxation on the activities of multinational
companies: a survey of existing evidence & data sources
There has been a considerable amount of economics research into the impact of
taxes on multinational companies. The main issues examined have been the impact
on location choice, investment, financial policy and the location of profit. The
bulk of this research has been undertaken by US researchers, primarily using
data originating from the US. Over time this work has become more sophisticated
and has used more and more detailed data.
This survey will provide a critical summary and evaluation of existing work. Two
aspects are particularly important in trying to set the scene for the new
research being commissioned. First, what are the strengths and weaknesses of
existing work? The survey is likely to be critical of some existing work,
particularly in the many attempts to gauge the impact of taxes on investment
decisions. Second, to what extent does existing work provide useful information
about the role of taxes in Europe?
Research
Paper - The Impact of Taxation on the Location of Capital, Firms and Profit:
A Survey of Empirical Evidence
Professor Michael Devereux, University of Warwick, UK
Research
Paper Data Appendix
Giorgia Maffini, University of Warwick
2
How are plant location decisions and capital flows in Europe affected by
corporate income taxes?
There is a significant literature examining the determinants of flows of foreign
direct investment. However, with respect to examining the role of taxes, this
literature is deficient in a number of ways. Of particular relevance here, it
does not analyse the details of business decisions, which include both discrete
choices (e.g. to locate in country A or B) and continuous choices (e.g. how much
investment to undertake, conditional on having chosen the location). The measure
of tax relevant for these two decisions are, in principle, different: the first
depends on an average tax rate, and the second on a marginal tax rate.
This paper will conduct a more detailed analysis of the importance of these
different types of decision, and the importance of different forms of effective
tax rate. It will use data on the foreign operations of US multinational firms,
aggregated within each source country. Specifically, it will examine the role
played by the two forms of taxes on the size of the capital stock owned by US
multinationals in each country.
Ben Lockwood is
a leading figure in economics research in tax policy, and specifically
international tax policy, who has published widely in leading journals. He is
primarily a theorist, but more recently has moved towards empirical work.
Research
Paper - Taxes and the size of the foreign-owned capital stock: which tax
rates matter?
Professor Ben Lockwood
3
How far do differences in international tax regimes between countries affect
financial policies?
There has been surprisingly little empirical research, especially in Europe, on
how differences in tax rates between countries can affect business financial
policies. Yet taxes are clearly a factor in how multinational companies
determine their financial arrangements: the statutory tax rate determines the
benefit of interest deductibility, and the form of integration of corporate and
personal taxes may affect the value of dividends.
This paper would aim to develop empirical evidence of the role played by taxes;
it would focus primarily on the role of differences in tax rates on the use of
debt. It would use company level data from the dataset Amadeus, which contains
standardised accounting data on a large number of companies across Europe, as
well as data on their ownership. The paper would aim to consider how far
differences in the use of debt are correlated with tax rates in the countries of
the subsidiary and parent, and whether the effects depend on the taxation of
outbound investment by the parent’s country.
Harry
Huizinga’s main area of research is the role played by taxes in various
aspects of finance, for example, the taxation of banking, deposit insurance and
international flows of interest. He has also written on corporate income taxes.
For 3 years from 2000 to 2003 he was an Economic Adviser in the Directorate
General for Economic and Financial Affairs at the European Commission.
Research
Paper - Capital Structure and International Debt Shifting in Europe
Professor Harry Huizinga, University of Tilburg, Netherlands
4
Profit shifting within the EU: evidence from Germany
A large part of government policy making with respect to international taxes on
business is devoted to identifying where profit is located, and preventing
excessive shifting of profits between jurisdictions. A number of recent academic
papers have appeared recently which have attempted to estimate the relationship
between tax rates and the location of profit. None of these has specifically
addressed the European situation.
This paper will use detailed data, originally collected by the Bundesbank, on
the activities of firms located in Germany, which includes the ownership
structure of those firms. Thus, for example, it is possible to compare rates of
profit of German subsidiaries of foreign multinational companies (further split
by nationality of the parent and the existence of subsidiaries in other
countries) with the rates of profit of domestic firms.
Alfons
Weichenreider originally trained at the University of Munich with Professor Hans
Werner Sinn. He has published widely on international aspects of corporate
income tax, and is one of the leading researchers in Europe undertaking
empirical work in this field.
Research
Paper - Profit Shifting in the EU: Evidence from Germany
Professor Alfons Weichenreider, University of Frankfurt, Germany
5
Do non-profit taxes affect the location of economic activity? Evidence
from the EU
The vast majority of economics research on the impact of taxes on the behaviour
of multinational firms has focused on the role of corporate income taxes. This
is for sound theoretical reasons; the basic model used in most work implies that
other taxes – such as VAT or payroll taxes – are not ultimately borne by the
company, and do not affect investment or financial policy. However, a recent
paper (by Professor Jim Hines and co-authors) presented empirical evidence of an
effect of “indirect” taxes on investment decisions. (In this paper,
“indirect taxes” included all non-profit taxes).
This paper would reinvestigate this question. It would go beyond the paper by
Hines et al in two ways. First, it would analyse rigorously the economic
conditions under which non-income taxes might affect investment decisions.
Second, it would use data on different forms of European taxes to investigate
which taxes (if any) play a role.
This paper would use the same Bundesbank data as the paper by Weichenreider.
Specifically, it would examine the location of subsidiaries of German companies
to examine the role played both by profits taxes and non-profits taxes.
Professor
Buettner has written widely on cross-border issues of tax policy, at
international and sub-national level. He recently left the leading international
research centre, ZEW, in Mannheim, to take up a Professorship at the University
of Munich, where he is the Head of the Public Finance programme at the IFO
research centre.
Research Paper - The Impact of Non-Profit Taxes on Foreign Direct Investment: Evidence from German Multinationals
Professor Thiess Buettner, University of Mannheim, Germany
6
An economic analysis of ECJ judgements on corporate income taxes in the EU
This is the “policy paper” for the first phase of the research, and as such
is rather different from the other papers. It will address two broad issues.
First, it will provide an economic analysis of the approach taken by the ECJ,
and to a lesser extent, the European Commission. To what extent is the approach
(for example, to prohibit discrimination in taxation of international activities
compared to wholly domestic activities) consistent with economically-desirable
features of an international tax system? And more fundamentally, is even the
continued existence of a separate accounting, source-based, tax system
consistent with the ECJ’s approach? Second, given the absence of any
likelihood of a single EU-wide corporate income tax, what are the economic
consequences of intermediate possibilities, such as a common corporate income
tax being agreed among a subset of EU countries?
Stephen Bond is
Professor of Economics at Oxford, and Research Fellow at the Institute for
Fiscal Studies. He is well know as a commentator on tax policy in the UK and
Europe. He has a distinguished record as a researcher, and apart from his work
on tax policy, is well known for his empirical work on investment, productivity
and finance.
Research
Paper - Corporate Income Taxes in the EU: An Economic Assessment of the Role
of the ECJ
Professor Stephen Bond, University of Oxford, UK
ETPF Research Main
ETPF Phase 2 The welfare implications of international taxation and tax competition
ETPF Phase 3 International tax and economic welfare
| ETPF Home | Research | About | Sponsors | Events | Contact |
© European Tax Policy Forum