Tax Transplants and Circulation of Corporate Tax Models

This article adopts a comparative evolutionary analysis to explain corporate tax reforms as a result of tax competition and shows that not only do countries compete to attract investment but that corporate tax policies also compete and selectively evolve: policy issues originate different solutions adopted by individual countries, and these countries form clusters that map the distribution of these solutions. The first section briefly explains why and how tax solutions circulate among countries in a process of “tax globalisation”. The second section clarifies that policy transfer is viewed in this context upon the basis of an evolutionary concept of tax competition mediated by complex institutional processes that intervene in tax transplants. The third section lays out a tentative taxonomy of the types of transplants by distinguishing between transplants in the strict sense and hybrid tax transplants, while the fourth section discusses in detail how corporate tax transplants operate as vehicles of evolutionary change that take the form of outright policy transfer or spontaneous diffusion of innovation. The fifth section focuses on spontaneous tax policy convergence, i.e. the fact that similar tax solutions may exist in different countries without a previous process of policy transfer. The article concludes with a few proposals for an agenda of empirical comparative research in the areas: cluster analysis of corporate taxes, analysis of corporate tax transplants, and field studies connected to corporate tax design.