| ID | 123616 |
| Title Proper | Domestic institutions and the taxing of multinational corporations |
| Language | ENG |
| Author | Jensen, Nathan M |
| Publication | 2013. |
| Summary / Abstract (Note) | Political scientists have examined how domestic politics and the competition for international capital affect the setting of national tax rates. In this paper, I explore how political institutions, specifically the level of democracy, affect firm-level taxation across the world. I argue that electoral competition leads democratic governments to higher levels of taxation on firms. Using a data set on firm tax payments on the foreign affiliates of US multinational corporations from the US Bureau of Economic Analysis, I show that there are large variations within countries on the tax burdens faced by firms that are not explained by national tax rates. I find evidence that the mobility of the specific investment project, the types of spillovers these investments provide to a community, and attributes of the parent firm are all important determinants of taxation. While firm-level factors clearly affect corporate taxation, I argue that democratic institutions limit the offering of tax incentives and generate electoral benefits to policing tax avoidance by multinational corporations. After controlling for parent firm and foreign affiliate-level factors, I find that democratic countries generate as much as 26% more tax revenues from multinational corporations relative to authoritarian countries. |
| `In' analytical Note | International Studies Quarterly Vol. 57, No.3; Sep 2013: p.440-448 |
| Journal Source | International Studies Quarterly Vol. 57, No.3; Sep 2013: p.440-448 |
| Key Words | Domestic Politics ; Competition ; National Tax Rates ; Political Institutions ; US Multinational Corporations |