Foreign tax credits, the supply of foreign capital, and tax exporting

Damus, Sylvester; Hobson, Paul A. R.; Thirsk, Wayne R.

doi:10.1016/0047-2727(91)90046-5

Cited by 9 publications

(6 citation statements)

References 11 publications

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“…This literature has also focused on issues such as foreign tax credits (e.g. Damus et al, 1991) and deductibility of state and local taxes with multilevel governments (e.g. Wildasin, 1987a).…”

Section: Theoretical Underpinnings Of the Studymentioning

confidence: 99%

“…Little empirical work has been done on tax exporting among countries. Damus et al (1991) evaluate tax exporting between Canada and the rest of the world.…”

Section: Theoretical Underpinnings Of the Studymentioning

confidence: 99%

“…The results of Damus et al (1991) indicate that tax exporting effects may be as significant as efficiency effects in evaluating potential reforms. Furthermore, efficiency effects may be influenced by the way foreign capital flows are modelled.…”

Section: Theoretical Underpinnings Of the Studymentioning

confidence: 99%

“…As indicated above, the literature we have reviewed mainly focuses on the exportation of state and local taxes to other regions within the same country, with the exception of Damus et al (1991). In what follows, we investigate whether developed countries export factor taxes to developing countries, contributing to the deterioration of their terms of trade and welfare.…”

Section: Theoretical Underpinnings Of the Studymentioning

confidence: 99%

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Tax exporting: an analysis using a multiregional CGE model

Iregui-Bohórquez¹

2001

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This paper investigates whether developed countries export taxes to developing countries, contributing to the deterioration of their terms of trade and welfare; that is to what extent the distribution of gains from trade is being affected not by existing tariffs in developed countries, which are already at low levels, but by their domestic taxation. An eight-region CGE model for the world economy is used. The results indicate that developed regions export capital taxes to developing regions. However, the effects of import tariffs on welfare and terms of trade are larger than those of domestic taxes.

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Section: Theoretical Underpinnings Of the Studymentioning

confidence: 99%

“…Little empirical work has been done on tax exporting among countries. Damus et al (1991) evaluate tax exporting between Canada and the rest of the world.…”

Section: Theoretical Underpinnings Of the Studymentioning

confidence: 99%

Section: Theoretical Underpinnings Of the Studymentioning

confidence: 99%

Section: Theoretical Underpinnings Of the Studymentioning

confidence: 99%

See 2 more Smart Citations

Tax exporting: an analysis using a multiregional CGE model

Iregui-Bohórquez¹

2001

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“…See Brown (1992); Francois and Shiells (1994). Damus et al (1991) have studied the implications of the existence of tax credits for Canada but in a corporate tax reform context.…”

Section: Introductionmentioning

confidence: 99%

Trade Liberalization and Foreign Direct Investment: An Applied General Equilibrium Model for Costa Rica

Abrego

1999

SSRN Journal

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Abstract:This paper quantifies the welfare impact of unilateral trade liberalization and computes the optimal tariff structure for Costa Rica in the presence of trade-policy-induced international capital flows and foreign capital taxation. For this, an applied general equilibrium model integrating trade, capital flows and international capital income taxation is used. The model has been calibrated to a 1990-91 data set for the economies of Costa Rica and a group of OECD countries. In the model, foreign capital income is taxed by host countries and the tax-credit system operates in foreign investors home countries. Results for Costa Rica show that complete trade liberalization ends up being welfare-reducing, as it leads to an outflow of capital and loss of tax revenue which more than offset the efficiency gains from an enhanced resource allocation.The optimal tariff structure for the Costa Rican economy turns out to be a mixture of import tariffs and subsidies, though of a relatively small level. Non-Technical SummaryIt is well-known that, in the absence of foreign capital taxation, international capital inflows Rica's optimal tariff structure under this setting. The model used disaggregates economic activity into 10 sectors, and is calibrated to a 1990-91 data set on production, trade, consumption, factor use, and capital income taxation both for Costa Rica and a group of OECD countries. The OECD countries included in this group are those which, as of 1990-91, were using the tax-credit mechanism described above, and accounted for roughly 80% of Costa Rica's foreign direct investment.Our results show that, with foreign capital taxation by Costa Rica and the tax credit mechanism in force in the OECD countries included in the model, complete elimination of import-tariffs by Costa Rica would reduce its welfare. The optimal tariff structure for this economy turns out to consist of a combination of relatively low import tariffs and subsidies. Though literally interpreted these results seem to provide a case against free trade, we qualify them by noting that the nature of the model used does not capture neither dynamic gains associated with trade nor other static cost usually linked with non-uniform tariff structures (such as rent-seeking-related costs).

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The effectiveness of corporate tax incentives for foreign investment in the presence of tax crediting

Mintz

Tsiopoulos

1994

Journal of Public Economics

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Foreign tax credits, the supply of foreign capital, and tax exporting

Cited by 9 publications

References 11 publications

Tax exporting: an analysis using a multiregional CGE model

Tax exporting: an analysis using a multiregional CGE model

Trade Liberalization and Foreign Direct Investment: An Applied General Equilibrium Model for Costa Rica

The effectiveness of corporate tax incentives for foreign investment in the presence of tax crediting

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