Following renewed academic and policy interest in the destination-based principle for taxing profits—particularly through a destination-based cash flow tax (DBCFT)—this paper studies other forms of efficient destination-based taxes. Specifically, it analyzes the Destination-Based Allowance for Corporate Equity (DBACE) and Allowance for Corporate Capital (DBACC). It describes adjustments that are required to turn an origin into a destination-based versions of these taxes. These include adjustments to capital and equity, which are additional to the border adjustments needed under a DBCFT. The paper finds that the DBACC and DBACE reduce profit shifting and tax competition, but cannot fully eliminate them, with the DBACE more sensitve than the DBACC. Overall, given the potential major political cost of switching from an origin to a destination-based tax system, we conclude that advantages of the DBCFT are likely to outweigh the transitional advantages of the DBACE/DBACC.
Fiscal instruments are potentially among the most effective, and cost-effective, options for addressing externalities related to poor air quality, urban road congestion, and greenhouse gases. This paper takes a case study, focused on Mauritius (a pioneer in the use of green taxes) to illustrate how existing taxes, especially on fuels and vehicles, could be reformed to better address these externalities. We discuss, in particular, an explicit carbon tax; a variety of options for reforming vehicle taxes to meet environmental, equity, and revenue objectives; and a progressive transition to usage-based vehicle taxes to address congestion
This paper deals with the design of quantitative exercises relating objectives for the growth of national income over the medium term to key macroeconomic policy variables. It focuses on the roles of capital formation, saving, and total factor productivity in the process of economic growth and examines the main conceptual and empirical problems involved in accounting for the growth of national income, dealing explicitly with the cost of borrowing from abroad. The paper examines the link, between fiscal and structural policies and the growth of productive capacity through the effect of those policies on productivity, saving and the cost of capital.
This paper discusses important tax policy issues facing developing countries today. It views tax policy from both the macroeconomic perspective, which focuses on broad questions such as the level and composition of tax revenue, and the microeconomic perspective, which focuses on certain design aspects of selected major taxes, such as the personal income tax, the corporate income tax, the value-added tax, excises, and import tariffs. It provides a review of the rote of tax incentives in these countries, and identifies some policy challenges posed by the globalization of the world economy.
income tax, but it allows the corporation to reduce the U.S. tax on its export profits. The taxsaving arises as follows. In general, a U.S. multinational corporation is subject to U.S. federal tax on all of its income, whether the income is earned at home or abroad. 2 The corporation receives a credit (as opposed to a deduction) for income taxes paid to foreign governments, but the credit is limited to the U.S. tax liability on foreign source income. Thus, if the foreign tax rate exceeds the U.S. tax rate, the corporation will pay more in foreign taxes than it can
Donald Rousslang, Mr. Stephen Tokarick, and Peter B. Clark
. Section four discusses the application of the model and section five contains the results of our experiments. Section six contains the conclusions.
II. The Sales Source Rules and the Foreign Sales Corporation Provisions
The sales source rules allow a U.S. multinational corporation to treat part of the profit from the production of U.S. exports as though it were foreign source income. 1/ Such treatment does not attract additional foreign income tax, but it allows the corporation to reduce the U.S. tax on its export profits. The taxsaving arises as follows. In
Mr. Alun H. Thomas, Mr. Christopher M Towe, and Mr. Steven V Dunaway
1 PRIVATE SAVING
Source: Bureau of Economic Analysis, U.S. Department of Commerce, supplied by Haver Analytics.
CHART 2 CONTRIBUTION TO TAX–ASSISTED SAVING PLANS
(Billions of dollars)
Sources: U.S. Internal Revenue Service; and U.S. Pension and Welfare Benefits Administration.
III. A Simple Analysis of Saving Incentives
The return to tax-assisted saving plans as compared to other taxablesaving vehicles can be illustrated as follows. 1/ Assuming a constant, nominal interest rate r, and a constant marginal tax rate τ