Multinational Capital Structure and Tax Competition

摘要: This paper analyzes tax competition when welfare maximizing jurisdictions levy source-based corporate taxes and multinational enterprises choose tax-efficient capital-to-debt ratios. Under separate accounting, multinationals shift debt from low-tax to high-tax countries. The Nash equilibrium of the game is characterized by underprovision publicly provided goods. formula apportionment, country-specific ratio a multinational's affiliate independent jurisdiction's rate. Public good provision either too large or small. If externality not negative, there clearly under apportionment.