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Farid TOUBAL (ENS Paris-Saclay) "Quantifying the Effects of International Tax Reforms"

December 7, 2020 @ 12:15 pm - 1:30 pm | Organizers: Julien PRAT, Edouard CHALLE

Time: 12:15pm – 13:30 pm
Date: 07 th of December 2020
Farid TOUBAL (ENS Paris-Saclay) “Quantifying the Effects of International Tax Reforms”
Abstract : Many reforms have been proposed to ensure that multinational firms pay their income taxes where they carry on their activities. Assessing ex-ante their impact requires a counterfactual analysis that takes into account the level of corporate taxation and the set of factors influencing the location of sales, production, and profits of multinational firms. We build a quantitative general equilibrium model featuring multinational activities and international corporate taxation. The model is calibrated using recent data on bilateral trade of goods and services, multinational sales, and profits for 40 countries, including 7 major tax havens. Specifically, we propose a new methodology to infer the amount of bilateral profits shifted by multinational corporations. The model predicts the change in the relative attractiveness of countries, the variation of tax revenues and inequalities within countries, and the world-level efficiency induced by the implementation of a broad range of different reforms. These include scenarios that either reallocate taxing rights across countries and/or address profit shifting to entities subject to no or very low taxation. We show that reforms aimed at curbing profit shifting are more likely to gain political consensus than those which redistribute taxing rights. We also study the optimal parameters (minimum tax rate and allocation key) in different corporate tax configurations.
Joint work with : Sébastien Laffitte, Mathieu Parenti, Baptiste Souillard