International Tax Spillovers and Tangible Investment, with Implications for the Global Minimum Tax
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Summary:
This paper articulates and, using newly-assembled data, explores how international taxation affects aggregate tangible cross-border investment. Spillovers from statutory tax rates abroad seem: As sizable as effects from the host’s rate; larger than previous consensus values (attributed to a systematic bias from FDI data); and consistent with ‘implicit’ profit shifting through real investment (rather than ‘paper’ profit shifting). Contrary to much policy discussion, the results also imply that: Host countries’ marginal effective tax rates have at best a weak effect on real investment; those elsewhere have none; and, applied to the prospective global minimum tax, inward tangible investment in most sample countries will increase.
Series:
Working Paper No. 2023/159
Subject:
Balance of payments Capital account Corporate income tax Foreign direct investment International tax issues Marginal effective tax rate Tax policy Taxes
Frequency:
regular
English
Publication Date:
August 4, 2023
ISBN/ISSN:
9798400248719/1018-5941
Stock No:
WPIEA2023159
Format:
Paper
Pages:
80
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