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Optimal Taxation of International Income Flows

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  • CHRISTOPHER C. FINDLAY

Abstract

Double taxation of international income flows has been regarded as undesirable and international tax agreements have been negotiated to avoid it. The questions asked are whether double taxation is appropriate and whether cooperation is required to reach the optimal solution. The results are that generally some double taxation is desirable, as long as taxes are applied at the appropriate rates, and that an efficient solution can be attained in the absence of explicit cooperation using a deduction rule, instead of the now commonly used credit rule. A rationale for the current system of tax agreements and their emphasis of the credit rule is discussed.

Suggested Citation

  • Christopher C. Findlay, 1986. "Optimal Taxation of International Income Flows," The Economic Record, The Economic Society of Australia, vol. 62(2), pages 208-214, June.
    • Handle: RePEc:bla:ecorec:v:62:y:1986:i:2:p:208-214
    DOI: 10.1111/j.1475-4932.1986.tb00896.x
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    References listed on IDEAS

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    Cited by:

    1. Gordon, R.H., 1990. "Canada-U.S. Free Trade And Pressures For Tax Harmonization," Working Papers 260, Research Seminar in International Economics, University of Michigan.
    2. George Zodrow, 2006. "Capital Mobility and Source-Based Taxation of Capital Income in Small Open Economies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(2), pages 269-294, May.
    3. Huizinga, Harry & Nielsen, Soren Bo, 1997. "Capital income and profit taxation with foreign ownership of firms," Journal of International Economics, Elsevier, vol. 42(1-2), pages 149-165, February.
    4. Gordon, Roger H, 1992. "Can Capital Income Taxes Survive in Open Economies?," Journal of Finance, American Finance Association, vol. 47(3), pages 1159-1180, July.
    5. Huizinga, Harry & Nielsen, Soren Bo, 2002. "The coordination of capital income and profit taxation with cross-ownership of firms," Regional Science and Urban Economics, Elsevier, vol. 32(1), pages 1-26, January.
    6. Neil Bruce, 1992. "A Note on the Taxation of International Capital Income Flows," The Economic Record, The Economic Society of Australia, vol. 68(3), pages 217-221, September.
    7. Mackie James & J. Rousslang Donald, 2000. "The Optimal Taxation of Income From International Investment: A Geometric Analysis," International Economic Journal, Taylor & Francis Journals, vol. 14(4), pages 77-86.
    8. Alberto Giovannini, 1987. "International Capital Mobility and Tax Evasion," NBER Working Papers 2460, National Bureau of Economic Research, Inc.
    9. Slemrod, Joel & Hansen, Carl & Procter, Roger, 1997. "The seesaw principle in international tax policy," Journal of Public Economics, Elsevier, vol. 65(2), pages 163-176, August.
    10. Yong Yang, 1998. "International Taxation When Domestic Distributional Policy is Constrained," International Economic Journal, Taylor & Francis Journals, vol. 12(1), pages 75-93.

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