In Praise of Tax Havens: International Tax Planning and Foreign Direct Investment

  title={In Praise of Tax Havens: International Tax Planning and Foreign Direct Investment},
  author={Qing Hong and M. Smart},
  journal={CESifo Working Paper Series},
The multinationalization of corporate investment in recent years has given rise to a number of international tax avoidance schemes that may be eroding tax revenues in industrialized countries, but which may also reduce tax burdens on mobile capital and so facilitate investment. Both the welfare effects of and the optimal response to international tax planning are therefore ambiguous. Evaluating these factors in a simple general equilibrium model, we find that citizens of high-tax countries… Expand
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