Abstract

http://ssrn.com/abstract=1684888
 
 

References (39)



 
 

Citations (2)



 


 



Rate-Cutting Tax Reforms and Corporate Tax Competition in Europe


Friedrich Heinemann


Centre for European Economic Research (ZEW)

Michael Overesch


Universität zu Köln

Johannes Rincke


Ludwig-Maximilians-Universität München; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)


Economics & Politics, Vol. 22, Issue 3, pp. 498-518, November 2010

Abstract:     
While there is a large and growing number of studies on the determinants of corporate tax rates, the literature has so far ignored the fact that the behavior of governments in setting tax rates is often best described as a discrete choice decision problem. We set up an empirical model that relates a government's decision whether to cut its corporate tax rate to the country's own inherited tax and taxes in neighboring countries. Using comprehensive data on corporate tax reforms in Europe since 1980, we find evidence suggesting that the position in terms of the tax burden imposed on corporate income relative to geographical neighbors strongly affects the probability of rate-cutting tax reforms. Countries are particularly likely to cut their statutory tax rate if the inherited tax is high and if they are exposed to low-tax neighbors.

Number of Pages in PDF File: 21

Accepted Paper Series


Date posted: October 4, 2010  

Suggested Citation

Heinemann, Friedrich and Overesch, Michael and Rincke, Johannes, Rate-Cutting Tax Reforms and Corporate Tax Competition in Europe. Economics & Politics, Vol. 22, Issue 3, pp. 498-518, November 2010. Available at SSRN: http://ssrn.com/abstract=1684888 or http://dx.doi.org/10.1111/j.1468-0343.2010.00375.x

Contact Information

Friedrich Heinemann (Contact Author)
Centre for European Economic Research (ZEW) ( email )
L 7,1
Mannheim, 68161
Germany
HOME PAGE: http://www.zew.de
Michael Overesch
Universität zu Köln ( email )
Albertus-Magnus-Platz
WiSo-Gebäude
Cologne, 50923
Germany
0221/470-5605 (Phone)
HOME PAGE: http://www.steuer.uni-koeln.de/
Johannes Rincke
Ludwig-Maximilians-Universität München ( email )
Seminar for Economic Policy
Akademiestr. 1/II
Munich, D-80799
Germany
CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Poschinger Str. 5
Munich, DE-81679
Germany
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References:  39
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