IMF Working Papers

Globalization and Corporate Taxation

By Manmohan S. Kumar, Dennis P. Quinn

October 22, 2012

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Manmohan S. Kumar, and Dennis P. Quinn Globalization and Corporate Taxation, (USA: International Monetary Fund, 2012) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyzes the extent to which the degree of international economic integration, both financial and trade, affects corporate tax rates. It explores this issue in the context of strategic behavior by countries, taking into account other global and domestic political economy factors. Tax rates are analyzed using a unique tax dataset for advanced and developing economies extending over five decades. We report a number of novel results: there is no general negative relationship between financial globalization and corporate tax rates and revenues—results vary according to country grouping with OECD countries showing a positive relationship; the United States exhibits a “Stackelberg” type of leadership on other countries; trade integration is inversely correlated with tax rates; and public sentiment and ideology affect tax rates. The policy implications of these findings, particularly given budgetary pressures in the aftermath of the global crisis, are noted.

Subject: Corporate income tax, Corporate taxes, Globalization, Personal income tax, Revenue administration, Taxes

Keywords: Account openness indicator, Capital share, Corporate income tax, Corporate tax rates, Corporate tax tax rate, Corporate taxes, Debt ratio, Diversified portfolio, Emerging market, Financial market, Global, Globalization, Government share, OECD country, Personal income tax, Share data, Strategic behavior, Tax rate, Tax revenues, WP

Publication Details

  • Pages:

    49

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2012/252

  • Stock No:

    WPIEA2012252

  • ISBN:

    9781557754752

  • ISSN:

    1018-5941

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