The Optimal Tax Rates in the Presence of Profit Shifting

• Main Author: 陳怡君
• Other Authors: 賴育邦
• Format: Others
• Language: zh-TW
• Online Access: http://ndltd.ncl.edu.tw/handle/8ujv5w

碩士 === 國立政治大學 === 財政學系 === 105 === Most of the literatures regarding the firms’ tax avoidance is based on the structure of perfectly competitive markets. Furthermore, the tax rates are generally exogenously determined. To fill the gap in the literature, this thesis follows Singh and Vives (1984) and Slemrod and Wilson (2009), and considers a duopoly in a closed economy. We establish a two-stage game and a three-stage game, respectively, to examine how the firms’ tax avoidance shapes the making of the profit tax rates. In the presence of profit shifting, I find that the optimal tax rate depends on the public-good effect and the tax-avoidance effect. In addition, it is more likely that the public-good effect is less than zero in countries where profit shifting is more prevalent, or the tax avoidance is not strictly audited. In this case, the optimal tax rate will be set at the lower bound. However, in countries where profit shifting is less prevalent, or the tax avoidance is strictly audited, the optimal tax rate depends on the public-good effect and the tax-avoidance effect. Depending on which force is stronger, the optimal profit tax rate can be set at the upper bound, lower bound, or be an interior solution. In terms of the product market structures, the optimal profit tax rate is independent of the product market structures in the absence of profit shifting. However, if the types of the concealment service functions are different, then the optimal profit tax rate is likely to rely on the product market structures.