An Examination of Multijurisdictional Corporate Income Taxes Under Formula Apportionment

No 1369, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines how corporate taxation of multijurisdictional firms using formula apportionment affects the incentives faced by individual firms and individual states. We find that formula apportionment creates factor price distortions which vary in general among firms within a state, and in such a way as often to put multistate firms at a competitive advantage. Formula apportionment also creates incentives for cross-hauling of output,with production in low tax rate states more profitably sold in hightax rate states, and conversely. Politically, formula apportionment appears to be very unstable --states face an incentive to shift to some other form of taxation. None of these problems exist when a corporate tax uses separate accounting.

Date: 1984-06
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Gordon, Roger and John Wilson "An Examination of Multijurisdictional Corporate Income Taxes Under Formula Apportionment." Econometrica, Vol. 54, No. 6 , (November 1986), pp. 1357-1376.

Downloads: (external link)
http://www.nber.org/papers/w1369.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:1369

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w1369

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().