Taxation of companies and highly qualified manpower plays a very important role in the competition between regions as business locations and is now even being intensified by globalization. In order to underscore subjective estimates of the tax burdens of different business locations with objective data, BAK Basel Economics is conducting a study carried out by the ZEW (Zentrum für Europäische Wirtschaftsforschung, Mannheim).
The objective of this IBC development module consists in compiling and comparatively analyzing of indicators for the regions and countries. The module is divided into two parts:
Company taxation
The method applied in this module is the Devereux-Griffith Approach (DG Approach). It calculates "effective average tax burdens" in addition to "effective marginal tax burdens" (i.e., the tax burdens borne by capital projects whose return on investment is just high enough to be deemed worthwhile to the investors). The effective average tax burdens are defined as the tax burdens on projects that yield returns greater than the minimum return.
Tax burdens on highly qualified manpower
A traditional way of comparing the fiscal attractiveness of regions competing with one another internationally is to concentrate on the tax burdens borne by mobile capital and mobile companies. Lately this approach has been broadened by paying increasing attention to the mobility of employees, especially those with high and highest qualifications. Of course local governments like to see such highly qualified people moving in, for one thing because of their lack of need for social support services. Several surveys have shown that companies competing for the best-qualified job applicants are also very interested in the level of taxation and other charges these potential employees would be faced with at the location in question.
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