Honors Theses and Capstones

Date of Award

Spring 2022

Project Type

Senior Honors Thesis

College or School

PAUL

Department

Economics

Program or Major

Economics; Money and Financial Markets

Degree Name

Bachelor of Arts

First Advisor

Andrew Seal

Abstract

Corporate tax haven nations are infamous for offering corporations lower tax rates so that they can operate at lower costs and increase their profits. How the tax policies of tax havens impact the citizens of those nations is seldom discussed. This paper aims to determine if the policies undertaken by tax havens to increase foreign investment benefit the welfare of the citizens of those nations in terms of employment rate. Using a small preliminary sample of havens and non-havens, an inverse relationship is observed between corporate tax rate and foreign direct investment, and corporate tax rate and employment. A larger sample was used to run a regression between unemployment and our other variables, and no significant relationship was observed. The lack of a relationship shows that lowering corporate tax rates with the intent of increasing foreign investment in tax haven nations will not have an impact on employment levels in that nation.

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