Business Taxes and International Competitiveness

Abstract:     
Around the world, policymakers are obsessed with the competitiveness of their domestic companies and domestically based multinational corporations (MNCs). Such concerns frequently influence policy, especially tax policy. In this paper, I develop a theory of how taxes affect the international competitiveness of businesses. I then use that theory to evaluate basic tax policy decisions, such as the choice between residence- and source-based taxation and the level of tax rates, and to understand the impact various provisions in the U.S. Internal Revenue Code are likely to have on the competitiveness of U.S.-based corporations and MNCs.

Number of Pages in PDF File: 29

Keywords: competitiveness, taxation, international competitiveness, international taxation, territorial taxation, worldwide taxation, foreign tax credit, source-based taxation, residence-based taxation, capital export neutrality, capital import neutrality, capital ownership neutrality

JEL Classification: F10, F30, H22, K34

working papers series