The Seesaw Principle in International Tax Policy

22 Pages Posted: 21 Apr 2011

See all articles by Joel B. Slemrod

Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business; National Bureau of Economic Research (NBER)

Roger Procter

affiliation not provided to SSRN

Carl Hansen

affiliation not provided to SSRN

Date Written: September 1994

Abstract

The standard analysis of the optimal international tax policy of a small country typically assumes that the country either imports or exports capital, but does not do both. This paper considers the situation in which a small country both exports and imports capital and can alter its tax on one or the other, but not both. In each case, a 'seesaw' relationship is identified, in which the optimal tax on the income from capital exports (imports) is inversely related to the given tax rate on income from capital imports (exports). The standard results for optimal taxation of capital exports and imports are shown to be special cases of the more general seesaw principle.

Suggested Citation

Slemrod, Joel B. and Procter, Roger and Hansen, Carl, The Seesaw Principle in International Tax Policy (September 1994). NBER Working Paper No. w4867. Available at SSRN: https://ssrn.com/abstract=1817298

Joel B. Slemrod (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
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National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Roger Procter

affiliation not provided to SSRN

No Address Available

Carl Hansen

affiliation not provided to SSRN

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