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dc.contributor.authorBecker, Sascha-
dc.contributor.authorEgger, Peter H-
dc.contributor.authorMerlo, Valeria-
dc.description.abstractMost existing empirical evidence on the impact of profit taxation on multinational firm activity is based on cross-country data. One major drawback of such data is that countries differ not only with regard to taxes but along other dimensions which might be hard to capture by means of observable characteristics. We compile a database of more than 11,000 municipalities in Germany to analyze the sensitivity of the location decisions of foreign MNEs with respect to business tax rates which are levied directly by the municipalities. Using count data models suited for cross-sectional and panel data, we find that higher business tax rates have a negative effect on the number of foreign MNE headquarters, after controlling for other determinants of firm location decisions. On average, a one-percent reduction of the municipal business tax rate (equivalent to a decline by about 0.14 percentage points) leads to an increase in the number of headquarters of foreign MNEs by about 0.05. Hence, the average municipality needs to reduce its business tax rate by 20% to attract one foreign MNE.en_UK
dc.relationBecker S, Egger PH & Merlo V (2008) How Low Business Tax Rates Attract Multinational Headquarters: Municipality-Level Evidence from Germany. Stirling Economics Discussion Paper, 2008-30.-
dc.relation.ispartofseriesStirling Economics Discussion Paper, 2008-30-
dc.subjectMultinational firmsen_UK
dc.subjectProfit taxationen_UK
dc.subjectRegional public financeen_UK
dc.subjectCount dataen_UK
dc.titleHow Low Business Tax Rates Attract Multinational Headquarters: Municipality-Level Evidence from Germanyen_UK
dc.typeWorking or Discussion Paperen_UK
dc.type.statusAuthor Version-
dc.contributor.affiliationIfo Institute, Germany-
dc.contributor.affiliationIfo Institute, Germany-
Appears in Collections:Economics Working Papers

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