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Full-Text Articles in International Economics
Reconsidering International Tax Neutrality, Michael S. Knoll
Reconsidering International Tax Neutrality, Michael S. Knoll
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For decades, U.S. international tax policy has shifted back and forth between territorial-source-exemption taxation and worldwide-residence-credit taxation. The former is generally associated with capital import neutrality (CIN) and the latter with capital export neutrality (CEN). One reason why national tax policy has shifted back and forth between those benchmarks is because it is widely accepted that a tax system cannot simultaneously satisfy both CEN and CIN unless tax rates on capital are harmonized across jurisdictions. In this essay, I argue that the international tax literature contains two different and conflicting definitions for CIN. Under one definition, which goes back at …
International Competitiveness, Tax Incentives, And A New Argument For Tax Sparing: Preventing Double Taxation By Crediting Implicit Taxes, Michael S. Knoll
International Competitiveness, Tax Incentives, And A New Argument For Tax Sparing: Preventing Double Taxation By Crediting Implicit Taxes, Michael S. Knoll
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Tax sparing occurs when a country with a worldwide tax system grants its citizens foreign tax credits for the taxes that they would have paid on income earned abroad, but that escapes taxation by virtue of foreign tax incentives. The supporters of tax sparing argue that it is a form of foreign aid, an obligation owed to developing countries, and a legitimate means of improving the competitiveness of resident investors. Tax sparing, however, has long been opposed by the United States on the grounds that it is an expensive and problematic concession to developing countries, inconsistent with basic and fundamental …
Taxes And Competitiveness, Michael S. Knoll
Taxes And Competitiveness, Michael S. Knoll
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Around the world, the tax laws are shaped by concerns with competitiveness. This paper provides a general theory of how taxes impact competitiveness. As part of that theory, this paper also introduces the concept of tax-based competitiveness neutrality. A tax system is competitively neutral when taxes do not cause competitors to change their relative valuations of any investments. This paper then uses that theory to evaluate tax policy in two high profile and important areas. The paper begins by describing two models of competitiveness, called the conduit or new money model and the investor or old money model. The central …