Why do countries change the taxation of foreign-source income of multinational firms?
By: Shin, Mi Jeong
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Material type: 
BookPublisher: International Political Science Review Description: 41(2), Mar, 2020: p.287-302.Subject(s): Territorial taxation, Worldwide taxation, Foreign-Source income of multinationals, Trade openness, Veto players
In:
International Political Science ReviewSummary: Why do some countries continue to tax income that multinational firms create overseas, even as other countries increasingly adopt a system that only taxes income generated within the country? I argue that this phenomenon reflects an interaction between trade openness and the number of veto players. Increasing trade openness incentivizes governments to move to a territorial tax system, because firms that operate across borders want to avoid various tax liabilities in multiple countries. Yet countries with fewer veto players are more likely to move to a territorial tax system than those with many veto players. To test my hypothesis, I employ survival and logistic regression analyses of 15 advanced industrialized countries between 1981 and 2013. Overall the findings conform to the expectation: Economically open countries with fewer veto players are more likely to shift to a territorial tax system than those with many veto players. – Reproduced
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 41(2), Mar, 2020: p.287-302 | Available | AR123364 |
Why do some countries continue to tax income that multinational firms create overseas, even as other countries increasingly adopt a system that only taxes income generated within the country? I argue that this phenomenon reflects an interaction between trade openness and the number of veto players. Increasing trade openness incentivizes governments to move to a territorial tax system, because firms that operate across borders want to avoid various tax liabilities in multiple countries. Yet countries with fewer veto players are more likely to move to a territorial tax system than those with many veto players. To test my hypothesis, I employ survival and logistic regression analyses of 15 advanced industrialized countries between 1981 and 2013. Overall the findings conform to the expectation: Economically open countries with fewer veto players are more likely to shift to a territorial tax system than those with many veto players. – Reproduced
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