Growth and welfare effects of unilateral corporate tax cuts under revenue neutral in an open economy model
0
조회
0
다운로드
0
인용
0
참고문헌
키워드
초록
This paper utilizes an open economy model that incorporates international industrial location and transportation costs to examine the ramifications of unilateral corporate tax rate reductions under a revenue-neutral framework on global growth and the welfare of each country. The findings demonstrate that a unilateral corporate tax reduction results in an influx of firms from abroad to the implementing country, and, under some conditions, it can enhance the world growth rate. A subsequent welfare analysis reveals that a unilateral corporate tax cut invariably enhances the economic welfare of the implementing country. However, it does not necessarily guarantee an improvement in the welfare of the partner country, given the augmented transportation cost burden stemming from international firm relocations.
Abstract
This paper utilizes an open economy model that incorporates international industrial location and transportation costs to examine the ramifications of unilateral corporate tax rate reductions under a revenue-neutral framework on global growth and the welfare of each country. The findings demonstrate that a unilateral corporate tax reduction results in an influx of firms from abroad to the implementing country, and, under some conditions, it can enhance the world growth rate. A subsequent welfare analysis reveals that a unilateral corporate tax cut invariably enhances the economic welfare of the implementing country. However, it does not necessarily guarantee an improvement in the welfare of the partner country, given the augmented transportation cost burden stemming from international firm relocations.