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Tax Incentives and International Capital Flows: The Case of the United States and Japan
Author:
International Monetary Fund
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Series:
IMF Working Papers
Volume/Issue:
Volume 1989: Issue 005
Language:
English
Publication Date:
01 Jan 1989
DOI:
https://doi.org/10.5089/9781451929508.001
ISBN:
9781451929508
ISSN:
1018-5941
Pages:
64
Keywords:
WP; cost of capital; inflation rate; rate of return; closed economy; tax wedge; after-tax return; market return; capital flow; raise savings; Tax wedge; Corporate income tax; Investment incentives; Capital flows; Capital income tax; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper explores how the tax treatment of investment and savings affects international capital flows as well as national and global welfare. Focusing on portfolio investment, it evaluates the international effects of capital income taxes in the United States and Japan. During the 1980s, these taxes encouraged capital flows to the United States both by favoring investment in that country and by harming the country’s relative savings performance. The paper concludes that the internationalization of financial markets calls for a careful study of the international implications of domestic tax policies.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 1989: Issue 005