The RSIT conducts research on policy-relevant topics in international taxation and cross-border activities of multinational companies. Below you will find a short summary of the most recent research projects. Please click on the right to get a full list of our publications and to download papers from our working paper series.
This chapter reviews the literature providing empirical estimates on the tax-elasticity of multinational profits and discusses the challenges faced when attempting to quantify tax-motivated profit shifting. We first use micro-level data to show that multinational corporations hold a disproportionately large share of profits and financial assets in tax havens, relative to real activities in these countries. We then argue that tax notches associated with anti-tax avoidance legislation may be exploited to better understand tax-motivated profit shifting. This approach suggests a semi-tax elasticity of pre-tax profits of about 0.22, which is substantially smaller than estimates provided in earlier studies.
This paper studies tax policy interaction among local governments for both mobile and immobile tax bases. We exploit exogenous changes in the local tax setting of German municipalities due to participation in state debt reduction programs to learn about the size, scope and nature of strategic interaction among local governments. Our results suggest strong and significant tax policy responses both in corporate as well as in property tax rates. Our estimates imply response function gradients in the range of 0.3 to 0.7, depending on the type of tax and state. Policy spillovers from property tax rates remain very local, which is consistent with yardstick competition behavior.
To decrease the amount of packaging waste in the public space and compensate for the disposal costs, the German city of Tübingen has introduced a tax in the amount of EUR 0.50 on disposable takeout beverage and food containers in January 2022. No tax is levied if reusable cups or plates are used by the restaurants and snack bars subject to the tax. This is a unique policy experiment as no other city in Germany has implemented a takeout packaging tax during the period of this study. Using the synthetic control method, I identify appropriate control groups for Tübingen to compare the public waste quantity and the spread of reusable food containers. There is no significant reduction in the weight of the waste in public litter bins in Tübingen. This might be due to the fact that packaging subject to the tax is relatively light in weight compared to other items in the bins such as illegaly disposed household waste. On the other hand, the number of restaurants in Tübingen that offer
reusable food and beverage containers increases sharply in the months before the intervention.