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Thomas Eichner and Marco Runkel
 
''Efficient tax competition under formula apportionment without the sales factor''
( 2012, Vol. 32 No.4 )
 
 
Within a tax competition framework, this note points out that the tax principle of Formula Apportionment may render corporate income taxation of multinational enterprises efficient even if a sales apportionment factor is not available. This is shown for constant returns to scale production functions with substitution elasticity greater than or equal to one. In the special case of a Cobb-Douglas production function, efficiency is attained either if the formula uses only payroll or if the formula weights on production inputs equal these inputs' production elasticities.
 
 
Keywords: tax competition, Formula Apportionment, sales factor
JEL: H7 - State and Local Government; Intergovernmental Relations: General
 
Manuscript Received : Aug 07 2012 Manuscript Accepted : Oct 09 2012

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