NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

An Examination of Multijurisdictional Corporate Income Taxes Under Formula Apportionment

Roger H. Gordon, John D. Wilson

NBER Working Paper No. 1369
Issued in June 1984
NBER Program(s):   PE

This paper examines how corporate taxation of multijurisdictional firms using formula apportionment affects the incentives faced by individual firms and individual states. We find that formula apportionment creates factor price distortions which vary in general among firms within a state, and in such a way as often to put multistate firms at a competitive advantage. Formula apportionment also creates incentives for cross-hauling of output,with production in low tax rate states more profitably sold in hightax rate states, and conversely. Politically, formula apportionment appears to be very unstable --states face an incentive to shift to some other form of taxation. None of these problems exist when a corporate tax uses separate accounting.

download in pdf format
   (1020 K)

email paper

This paper is available as PDF (1020 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w1369

Published: Gordon, Roger and John Wilson "An Examination of Multijurisdictional Corporate Income Taxes Under Formula Apportionment." Econometrica, Vol. 54, No. 6 , (November 1986), pp. 1357-1376.

Users who downloaded this paper also downloaded these:
Hines w15185 Income Misattribution under Formula Apportionment
McLure, Jr. w0616 The Elusive Incidence of the Corporate Income Tax: The State Case
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us