Business Taxes and International Competitiveness

Document Type



Around the world, policymakers are obsessed with the competitiveness of their domestic companies and domestically based multinational corporations (MNCs). Such concerns frequently influence policy, especially tax policy. In this paper, I develop a theory of how taxes affect the international competitiveness of businesses. I then use that theory to evaluate basic tax policy decisions, such as the choice between residence- and source-based taxation and the level of tax rates, and to understand the impact various provisions in the U.S. Internal Revenue Code are likely to have on the competitiveness of U.S.-based corporations and MNCs.

Date of Authorship for this Version

May 2008


competitiveness, taxation, international competitiveness, international taxation, territorial taxation, worldwide taxation, foreign tax credit, source-based taxation, residence-based taxation, capital export neutrality, capital import neutrality, capital ownership neutrality