Friday, September 20, 2013
Elizabeth Chorvat (Chicago), The Tax Calculus of Corporate Locational Decisions, 32 Berkeley J. Int'l L. ___ (2014):
This paper addresses the chief arguments in favor of restricting tax competition. Taking into account standard economic theory relating to the selection criteria for public goods and the risk-shifting features of the income tax, it is not surprising that the empirical evidence does not support the prevailing notion that tax competition will lead to a "race to the bottom" in the taxation of mobile factors. The view that tax competition necessitates an erosion of the tax base fails to articulate the actual effects of tax-motivated corporate locational decisions on the fiscal systems of the developed world. By restructuring their tax systems to more closely align with a normative income tax which does not place non-economic limits on the use of losses, developed nations will continue to attract business investment while, and perhaps more importantly, allowing developing nations to compete for capital and investment.