Citation

Discussion Paper Details

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Full Details

Title: Capital Flight and Tax Competition: Are there Viable Solutions to Both Problems

Author(s): Alberto Giovannini and James R Hines Jr

Publication Date: May 1990

Keyword(s): Corporate Income Tax, Foreign Direct Investment, Foreign Tax Credit and International Capital Mobility

Programme Area(s): International Macroeconomics

Abstract: This paper discusses a model corporate tax system based on the application of the residence principle. This tax system, while preserving national sovereignties, minimizes the distortions arising from international capital mobility. The paper is motivated by an analysis of European capital income tax systems, and of the distortions that might arise as obstacles to international capital flows diminish. The alternative system that we analyse has two main properties: it exploits the territoriality of law enforcement, and it allows countries to set the corporate tax rate -- and the extent of double taxation of corporate income -- independently.

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Bibliographic Reference

Giovannini, A and Hines Jr, J. 1990. 'Capital Flight and Tax Competition: Are there Viable Solutions to Both Problems'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=416