Corporate tax rates have been consistently falling around the world for decades now. This paper aims to explain the causes and consequences of this ‘global race to the bottom’. In particular, the author wishes to test the hypothesis that this race to the bottom is driven by demand-boosting corporate tax competition, where, contrary to traditional Kaleckian theory, lower corporate taxes may positively affect demand through increased investment due to multinational enterprises (MNEs) that seek higher net profits through (re)locating in low-tax jurisdictions. In order to do so, the author builds a general theory of the effect of average effective corporate tax rates (AECTRs) on MNE location. This theory is used to justify the addition of a tax-sensitive foreign direct investment channel in the investment function of a canonical Kaleckian model. As a result, this paper determines the conditions under which a country may be ‘tax-competition-led’, where lowering AECTRs increases demand through increased MNE investment and in spite of the negative effect on government expenditure given a balanced budget. The findings of this paper are that it is possible for an economy to be tax-competition-led, though it is unlikely in many cases given the existence of a coordination problem that lessens or nullifies the effect of lowering AECTRs when many countries do so simultaneously. The author refers to this problem as the ‘paradox of tax competition’, since, like other fallacies of composition commonly identified in Post-Keynesian thought, this is a phenomenon where the benefits of one country acting alone are reduced or eliminated if other countries act the same way at the same time. Based on this model, crude but nonetheless informative estimates are given that indicate that the race to the bottom has had a negative effect on demand in the vast majority of OECD countries. In this sense, the author finds that the persistence of policymakers to continue to compete on corporate taxes ‘imprudent’. Model-consistent policy recommendations are offered, chief among which are tax coordination or, failing that, technical changes in how individual countries collect corporation tax.

中文翻译：

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税收竞争能否刺激需求？全球企业税率逐底竞争的原因和后果

几十年来，世界各地的公司税率一直在下降。本文旨在解释这种“全球竞相逐底”的原因和后果。特别是，作者希望检验这种逐底竞争是由促进需求的公司税竞争驱动的假设，与传统的卡莱克理论相反，较低的公司税可能通过跨国企业 (MNEs) 增加的投资对需求产生积极影响。 ) 通过（重新）定位到低税收管辖区来寻求更高的净利润。为此，作者构建了平均有效公司税率 (AECTR) 对跨国公司选址影响的一般理论。该理论用于证明在典型 Kaleckian 模型的投资函数中添加对税收敏感的外国直接投资渠道是合理的。因此，本文确定了一个国家可能“税收竞争主导”的条件，在这种情况下，降低 AETR 会通过增加跨国公司投资来增加需求，尽管在平衡预算的情况下对政府支出产生负面影响。本文的研究结果是，一个经济体有可能由税收竞争主导，尽管在许多情况下不太可能存在协调问题，当许多国家同时这样做时，降低或抵消降低 AETR 的影响. 作者将这个问题称为“税收竞争悖论”，因为与后凯恩斯主义思想中常见的其他构成谬误一样，这是一个国家单独行动的好处减少或消除的现象，如果其他国家同时采取同样的行动。基于这个模型，给出了粗略但仍然有用的估计，表明竞相逐底对绝大多数经合组织国家的需求产生了负面影响。从这个意义上说，作者发现政策制定者坚持在公司税上继续竞争“不谨慎”。提供了与模型一致的政策建议，其中主要是税收协调，否则，个别国家如何征收公司税的技术变化。