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Evolutionary Tax Competition with Formulary Apportionment

Wagener, Andreas (2017) Evolutionary Tax Competition with Formulary Apportionment. WU International Taxation Research Paper Series, 2017-13. WU Vienna University of Economics and Business, Universität Wien, Vienna.

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Abstract

Evolutionary stability is a necessary condition for imitative dynamics of policy learning and innovation to come to a rest. We apply this concept to profit tax competition in a regime where a common and consolidated profit tax base for multi-jurisdictional firms is divided among governments by means of formulary apportionment. In evolutionary play, governments exhibit aggregate-taking behavior: when comparing their performance with others, they ignore their impact on the consolidated tax base. Consequently, evolutionarily stable tax rates are less efficient than tax rates in best-response tax competition.

Item Type: Paper
Additional Information: Editors: Eva Eberhartinger, Michael Lang, Rupert Sausgruber and Martin Zagler (Vienna University of Economics and Business), and Erich Kirchler (University of Vienna)
Keywords: Imitation and learning, Tax competition, Formulary apportionment, CCCTB
Classification Codes: JEL H77, H25, F23, C73.
Depositing User: ePub Administrator
Date Deposited: 05 Dec 2017 14:35
Last Modified: 05 Dec 2017 14:35
URI: http://epub.wu.ac.at/id/eprint/5899

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