Sunday, September 5, 2004

David Bradford (Princeton) has posted The X Tax in the World Economy on SSRN. Here is the abstract:

This paper considers the treatment of multinational business in the system known as an X Tax. The focus is on the choice between origin and destination treatments of transborder transactions. The destination-principle approach sidesteps the transfer-pricing problem. It remains in the origin-principle approach, which, however, presents fewer challenges of monitoring imports, obviates the ‘tourism problem’ whereby people can reduce their taxes by consuming in a low-tax jurisdiction and avoids transition effects associated with introduction of the tax and subsequent tax rate changes. The paper suggests special rules for transborder transactions between related parties to deal with the transfer-pricing problem.