29 Pages Posted: 28 May 2008
Date Written: May 28, 2008
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.
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
Suggested Citation: Suggested Citation
Knoll, Michael S., Business Taxes and International Competitiveness (May 28, 2008). U of Penn, Inst for Law & Econ Research Paper No. 08-12. Available at SSRN: https://ssrn.com/abstract=1138374 or http://dx.doi.org/10.2139/ssrn.1138374