Multinational Firms’ Heterogeneity in Tax Responsiveness: the Role of Transfer Pricing

In this paper we show that the ability of multinational firms to manipulate transfer prices affects the tax sensitivity of foreign direct investment (FDI). We offer a model of international capital allocation where firms are heterogeneous in their ability to manipulate transfer prices. Perhaps paradoxically, we show that the ability to shift profits can make parent companies' investment more sensitive to host-country tax rates, as long as investors expect fisscal authorities to use price and profit detection methods. We then offer a comprehensive empirical study to test our predictions in the case of Japanese FDI. We exploit the finding that the unobservable ability to manipulate transfer prices is correlated with whole ownership of a±liates and R&D expenditure. Based on country, parent firm and sector characteristics, we estimate an investment equation on a sample of 3614 Japanese affiliates in 49 emerging countries. We obtain a greater semi-elasticity of investment to the statutory tax rate in a±liates that are wholly-owned and that have R&D intensive parents. We interpret these results as indirect evidence that abusive transfer pricing is one of the determinants of FDI activity.

Inverted Haavelmo Effects in a General Equilibrium Analysis of the Impact of Implementing the Scottish Variable Rate of Income Tax.

The Scottish Parliament has the authority to make a balanced-budget expansion or contraction in public expenditure, funded by corresponding local changes in the basic rate of income tax of up to 3p in the pound. This fiscal adjustment is known as the Scottish Variable Rate of income tax, though it has never, as yet, been used. In this paper we attempt to identify the impact on aggregate economic activity in Scotland of implementing these devolved fiscal powers. This is achieved through theoretical analysis and simulation using a Computable General Equilibrium (CGE) model for Scotland. This analysis generalises the conventional Keynesian model so that negative balanced-budget multipliers values are possible, reflecting a regional “inverted Haavelmo effect”. Key parameters determining the aggregate economic impact are the extent to which the Scottish Government create local amenities valuable to the Scottish population and the extent to which this is incorporated into local wage bargaining.

The Optimal Distribution of the Tax Burden over the Business Cycle

This paper analyses optimal income taxes over the business cycle under a balanced-budget restriction, for low, middle and high income households. A model incorporating capital-skill complementarity in production and differential access to capital and labour markets is developed to capture the cyclical characteristics of the US economy, as well as the empirical observations on wage (skill premium) and wealth inequality. We .nd that the tax rate for high income agents is optimally the least volatile and the tax rate for low income agents the least countercyclical. In contrast, the path of optimal taxes for the middle income group is found to be very volatile and counter-cyclical. We further find that the optimal response to output-enhancing capital equipment technology and spending cuts is to increase the progressivity of income taxes. Finally, in response to positive TFP shocks, taxation becomes more progressive after about two years.

Competition for FDI and profit shifting: On the effects of subsidies and tax breaks

We investigate competition for FDI within a region when a foreign multinational rm can profitably exploit differences in statutory corporate tax rates by shifting taxable pro ts to lower-tax jurisdictions. In such framework we show that targeted tax competition may lead to higher welfare for the region as a whole than lump-sum subsidies when the difference in statutory corporate tax rates and/or their average is high enough. Tax competition is also preferable from an efficiency point of view (overall surplus) by changing the firm's investment decision when pro t shifting motivations induce the rm to locate in the (before tax) least pro table country.

Is the Spanish Inheritance and Gift Tax incompatible with the free movement of workers and capital?: The reasoned opinion of the EU Commission IP/10/513

The aim of my speech is answering to the question if the Spanish Inheritance and Gift Tax is incompatible with the free movement of workers and capital. We are going to pay special attention to the European Commission’s request to Spain to change its Inheritance and Gift Tax provisions for Non-Residents or Assets held abroad. In order to answer to the question mentioned above five points will be explained. At first place I am going to describe the infrengement procedure established in the Article 258 that the EU Commission can follow when a Member State doesn’t comply with Community Law. At second place, we are going to explain what is the content of the EU Commission delivered on 5th of may 2010 regarding the spanish Inheritance and Gift Tax. Then, we will analise what establishes the Community Law regarding the freedom of workers and capital and how they are understood by the EU Court of Justice in similar cases. Finally, we are going to provide possible amendments that Spain could undertake.

Tax Coordination Between Regions in Spain. The Role of the Courts

Overview of the Tax Coordination of the Regions in Spain from the point of view of the role of the Courts in developing the present system

Tax Coordination Between Regions in Spain - Role of the Courts

Análisis de la jurisprudencia constitucional española sobre la distribución de competencias tributarias entre los distintos niveles de gobierno.

Tax evasion, technology shocks, and the cyclicality of government revenues

This paper analyzes the behavior of the tax revenue to output ratio over the business cycle. In order to replicate the empirical evidence, we develop a simple model combining the standard Ak growth model with the tax evasion phenomenon. When individuals conceal part of their true income from the tax authority, they face the risk of being audited and hence of paying the corresponding fine. Under the empirically plausible assumptions that the intertemporal elasticity of substitution exhibits a sufficiently small value and that productivity shocks are serially correlated, we show that the elasticity of government revenue with respect to output is larger than one, which agrees with the empirical evidence. This result holds even if the tax system displays flat tax rates. We extend the previous setup to generate larger fiscal deficits when the economy experiences a recession.

Environmental Tax on Products and Services Based on Their Carbon Footprint: A Case Study of the Pulp and Paper Sector

The main aim of this work is to define an environmental tax on products and services based on their carbon footprint. We examine the relevance of conventional life cycle analysis (LCA) and environmentally extended input-output analysis (EIO) as methodological tools to identify emission intensities of products and services on which the tax is based. The short-term price effects of the tax and the policy implications of considering non-GHG are also analyzed. The results from the specific case study on pulp production show that the environmental tax rate based on the LCA approach (1,8%) is higher than both EIO approaches (0,8% for product and 1,4% for industry approach), but they are comparable. Even though LCA is more product specific and provides detailed analysis, EIO would be the more relevant approach to apply economy wide environmental tax. When the environmental tax considers non-GHG emissions instead of only CO2, sectors such as agriculture, mining of coal and extraction of peat, and food exhibit higher environmental tax and price effects. Therefore, it is worthwhile for policy makers to pay attention on the implication of considering only CO2 tax or GHG emissions tax in order for such a policy measure to be effective and meaningful. Keywords: Environmental tax; Life cycle analysis; Environmental input-output analysis.

Clarification of the Meaning of "Beneficial Owner" in the OECD Model Tax Convention: Comment on the April 2011 Discussion Draft

In April 2011, the OECD released an important discussion draft that is intended to clarify the meaning of the term "beneficial ownership" under articles 10, 11 and 12 of the OECD Model (2010). This article discusses these proposals and demonstrates that some refinement is necessary.

Foundation Funded OER vs. Tax Payer Funded OER - A Tale of Two Mandates

Compare and contrast foundation funded OER with taxpayer funded OER in terms of global vs. local goals, licensing options, use cases, and outcomes.

Iowa Crime Rate Comparisons Report, Iowa Department of Public Safety,1999

This report describes how Iowa compares to other states in the nation. To promote consistency, the Iowa totals and the other states’ information have been taken entirely from the FBI’s national publication called Crime in the United States; 1999. The Iowa information in Crime in the United States; 1999 is based upon actual summary totals for selected reporting jurisdictions and produced by the U.S. Department of Justice, F.B.I. These Iowa totals cannot be compared to the 1999 Incident-Based Iowa Uniform Crime Reports, which are based on actual totals for all reporting Iowa law enforcement jurisdictions.

Iowa Crime Rate Comparisons Report, Iowa Department of Public Safety, 2001

This report describes how Iowa compares to other states in the nation. To promote consistency, the Iowa totals and the other states’ information have been taken entirely from the FBI’s national publication called Crime in the United States; 2001. The Iowa information in Crime in the United States; 2001 is based upon actual summary totals for selected reporting jurisdictions and produced by the U.S. Department of Justice, F.B.I. These Iowa totals cannot be compared to the 2001 Incident-Based Iowa Uniform Crime Reports, which are based on actual totals for all reporting Iowa law enforcement jurisdictions.