Michael Keen on Domestic Taxes and International Trade Some Evidence

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					                                            International Tax Policy Forum

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                                                                          ITPF Conference
Member Companies                                                    Tax Reform in an Open Economy
Air Products & Chemicals, Inc.
Altria Group, Inc.
                                                                           December 2, 2005
Amgen, Inc.
Bank of America
Bristol-Myers Squibb Company
                                                                             Research Summary
Caterpillar Inc.
Cisco Systems, Inc.
                                          Presenter: Michael Keen
Delphi Corporation                                   Head, Tax Policy Division
Eastman Kodak Company
                                                     International Monetary Fund
Electronic Data Systems Corp.                        Prof. Keen is also President of the International Institute of Public
Emerson Electric Co.
Exxon Mobil Corporation
                                                     Finance. Before this, he was Professor of Economics at the
Ford Motor Company                                   University of Essex (U.K.), and visiting professor at Queens
General Electric Co.
Georgia-Pacific Corporation
                                                     University (Canada) and Kyoto University (Japan). He has
IBM Corporation                                      written on a range of issues in theoretical and applied public
ITT Industries, Inc.
Johnson & Johnson
                                                     finance, with recent publications in the American Economic
MCI                                                  Review, Journal of Public Economics, Economic Policy, the
Mars, Incorporated
                                                     National Tax Journal, and elsewhere. He is also co-author of a
Merrill Lynch                                        book on The Modern VAT .
Microsoft Corporation
Morgan Stanley Group Inc.
PepsiCo, Inc.                             Session:      Foreign Direct Investment and Factor Markets Effects of Tax
The Coca-Cola Company
The Procter & Gamble Company
                                                        Reform on International Trade Flows
The Prudential Insurance Company
Time Warner Inc.
Tupperware Corporation
                                          Summary: Professor Keen’s paper, entitled “Domestic Taxes and
United Technologies Corporation                    International Trade: Some Evidence,” examines the effect of
John M. Samuels, Chairman
                                                   corporate and value-added taxes (VATs) on export performance
                                                   among OECD countries. The paper concludes the following:
Board of Academic Advisors
Glenn Hubbard, Chairman
James R. Hines, Jr., Research Director                      Changes in reliance on corporate taxation have significant and
Alan J. Auerbach
Mihir A. Desai                                               quite complex trade impacts: In the short run, increased
Michael J. Graetz                                            corporate taxation is associated with increased net exports.
                                                             Over the long run, however, this increase turns into a
Consultants                                                  persistent reduction in net exports that eventually declines to
Lindy Paull
Bernard M. (Bob) Shapiro                                     zero, leaving net exports unaffected.
Bill Archer
Peter R. Merrill
                                                            The VAT itself appears to have no impact on export
                                                             performance, suggesting it is inherently trade neutral.

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