Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Taxation of firms with unknown mobility
University of Münster, Germany.
University of Oslo, Norway.
2018 (English)In: Journal of Public Economic Theory, ISSN 1097-3923, E-ISSN 1467-9779, Vol. 20, no 2, p. 202-217Article in journal (Refereed) Published
Abstract [en]

We analyze optimal business tax policy when some firms are able to escape taxation by moving abroad. In contrast to the existing literature, we assume that the true number of mobile firms is ex ante unknown. While the government may learn from the firms' location responses to past tax rate changes, firms may anticipate this and adjust their choices accordingly. We find that incomplete information on mobility substantially affects the properties and the implications of equilibrium policy choices. First, the government may find it optimal to set a tax rate that triggers partial firm migration but full revelation of the true number of mobile firms. Second, we show that, if the firms' outside option is attractive (i.e., relocation cost and foreign tax rates are low), expected tax rates and expected firm migration are higher if the degree of mobility is unknown. Third, there is a positive value of learning, i.e., commitment on future tax rates cannot increase the government's expected revenue. However, if the government can commit to a rule-based learning mechanism, i.e., credibly tie its future tax policy to present policy outcomes, it may obtain a Pareto improvement. 

Place, publisher, year, edition, pages
John Wiley & Sons, 2018. Vol. 20, no 2, p. 202-217
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-46452DOI: 10.1111/jpet.12240ISI: 000426861700005Scopus ID: 2-s2.0-85015327602OAI: oai:DiVA.org:hj-46452DiVA, id: diva2:1357489
Available from: 2019-10-04 Created: 2019-10-04 Last updated: 2019-10-04Bibliographically approved

Open Access in DiVA

No full text in DiVA

Other links

Publisher's full textScopus

Authority records BETA

Schneider, Andrea

Search in DiVA

By author/editor
Schneider, Andrea
In the same journal
Journal of Public Economic Theory
Economics

Search outside of DiVA

GoogleGoogle Scholar

doi
urn-nbn

Altmetric score

doi
urn-nbn
Total: 1 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf