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on Public Finance |
| By: | Koch, Reinald; Ostermann, Leon; Spengel, Christoph |
| Abstract: | This paper examines how jurisdictions have responded to the introduction of the OECD Pillar Two framework and analyses the implications of these developments for international tax competition. Using a comprehensive dataset covering 223 tax systems, we examine the global implementation of Pillar Two mechanisms, the development of statutory corporate income tax (CIT) rates between 2015 and 2025, the redesign of tax incentives, and the extent to which Pillar Two establishes a level playing field for multinational enterprises. The findings reveal substantial asymmetries in the implementation and practical operation of Pillar Two. By 2026, only a limited group of jurisdictions had implemented all major Pillar Two mechanisms, although implementation is considerably more widespread among European countries. At the same time, the long-run decline in statutory CIT rates appears to have slowed following the 2021 Pillar Two agreement. However, low-tax jurisdictions continue to compete through alternative channels, including substance-based tax incentives and preferential regimes designed to interact favourably with Pillar Two rules. Overall, the evidence suggests that Pillar Two is unlikely to eliminate international tax competition but instead may fundamentally reshape its structure. At the same time, heterogeneous implementation across jurisdictions creates the risk that the regime amplifies existing international differences in effective corporate taxation rather than establishing a genuinely level global playing field. |
| Keywords: | Global Minimum Tax, tax competition, firm competition, corporate tax law |
| JEL: | H25 K34 F23 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:343044 |
| By: | Stenkula, Mikael (Research Institute of Industrial Economics (IFN)); Wykman, Niklas (Örebro University School of Business and) |
| Abstract: | Sweden’s dual income tax (DIT) system, introduced through the 1990–1991 tax reform, relies on income-splitting rules for active owners of closely held corporations to limit income shifting. This article quantifies how the tax system has shaped investment incentives and tax neutrality since the reform. Using an extended King–Fullerton framework, we construct annual marginal effective tax rate (METR) series for a marginal investment, distinguishing financing through new equity, retained earnings, and debt, and allowing for different rates of return and owner income positions. The results show substantial non-neutrality and pronounced time variation, especially for new equity. Debt is typically tax-favored, while new equity can be favored over retained earnings at low returns but becomes less favorable at higher returns as more surplus is taxed as labor income. Inflation materially affects long-run comparisons and short-run fluctuations. The analysis is relevant for other DIT countries designing anti-shifting regimes for owner-managed firms. |
| Keywords: | Cost of capital; Marginal effective tax rates; Dual income tax; Income splitting rules |
| JEL: | G35 H24 H25 H26 |
| Date: | 2026–09–08 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1565 |
| By: | Joshua Coven (CUNY Baruch College); Sebastian Golder (New York University); Arpit Gupta (New York University); Abdoulaye Ndiaye (New York University, Stern School of Business) |
| Abstract: | Low property taxes amplify lock-in among elderly homeowners, limiting housing access for young families. Raising them reallocates housing toward the young through two channels: capitalization into lower prices reduces required down-payments for financially constrained buyers, a form of embedded leverage, while higher tax obligations raise holding costs for older owners. In our overlapping generations model, raising California's property taxes to Texas levels increases young homeownership while decreasing elderly homeownership. Removing step-up basis also lowers elderly homeownership, suggesting their tenure is sustained by bequest tax advantages. The tax treatment of housing shapes housing allocation across generations. |
| Keywords: | housing affordability, housing inequality |
| JEL: | H71 R21 H24 J11 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:hka:wpaper:2026-010 |