Resource title

What drives corporate tax rates down?: a reassessment of globalization, tax competition, and dynamic adjustment to shocks

Resource image

image for OpenScout resource :: What drives corporate tax rates down?: a reassessment of globalization, tax competition, and dynamic adjustment to shocks

Resource description

We reassess the driving forces behind the recent decline of corporate tax rates in Europe. Using data for up to 32 countries from 1983 to 2006, we analyze the role of economic and financial openness as well as tax competition while allowing for dynamic adjustment to shocks and period-specific as well as country-specific effects. While openness does not seem to be systematically related to corporate tax rates, our findings suggest that countries compete over statutory tax rates. In contrast, we do not find competition over effective marginal rates. While the short-run impact of tax competition on corporate tax rates seems to be modest, the interplay of tax competition and a sluggish adjustment of tax rates over time implies that permanent shocks to individual countries have substantial long-run effects on equilibrium tax levels in all countries.

Resource author

Michael Overesch, Johannes Rincke

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26580

Resource license

Adapt according to the presented license agreement and reference the original author.