Tax competition and the international distribution of firm ownership : an invariance result

Ferrett, B. and Wooton, I. (2010) Tax competition and the international distribution of firm ownership : an invariance result. International Tax and Public Finance, 17 (5). pp. 518-531. ISSN 0927-5940 (https://doi.org/10.1007/s10797-009-9126-z)

[thumbnail of Tax_Competition_and_the_International_Distribution_of_Firm_Ownership.pdf]
Preview
PDF. Filename: Tax_Competition_and_the_International_Distribution_of_Firm_Ownership.pdf
Accepted Author Manuscript

Download (163kB)| Preview

Abstract

How does the international distribution of firm ownership affect the outcomes of tax/subsidy competition for mobile plants? As corporate ownership becomes increasingly globalised, this question becomes increasingly important for policy. We prove a strong invariance result in the context of the tax/subsidy competition between two host countries for a monopoly firm's plant. Both the equilibrium plant location and the equilibrium tax/subsidy offers are independent of the international distribution of the firm's ownership. The reason is that the tax/subsidy competition equalises the firm's post-tax profits across countries, making owners of capital indifferent towards the location of production.

ORCID iDs

Ferrett, B. and Wooton, I. ORCID logoORCID: https://orcid.org/0000-0001-5084-6379;