On Governments, Companies and Taxes

The EU flag is seen with logos of American technology companies. (Photo by Jaap Arriens/NurPhoto) [ Rechtehinweis: picture alliance / NurPhoto ]
The EU flag is seen with logos of American technology companies.
  • Why it matters

    Why it matters

    Competition between countries can drive up taxes, writes the author. Many internationally active companies fear it could lead to double taxation.

  • Facts


    • In 1965, custom duties constituted 7.1 percent of public revenues for OECD countries. Today the figure is 0.5 percent.
    • In recent decades, tax rates on corporate earnings have been in decline. In 1983, the OECD average was 46 percent; by 2016, it had fallen to 25 percent.
    • Taxes on mobile assets can induce capital or asset owners to move to another country.
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Globalization raises fundamental issues regarding the financing of state activities. Capital, goods and people move across national borders. Many companies too can shift production sites, patents and jobs abroad.

In such an environment, can national taxation policies still bring in enough revenues to finance public budgets? Can politics still distribute tax burdens between capital and labor, between rich and poor?

Experiences with globalization up to now show that it is still possible to finance state activities. But the distribution of tax burdens is shifting in the direction of less mobile tax bases, even if that is changing quite slowly.

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