Targeting the problem of 'homeless profits' that digital firms earn in countries without a physical presence, OECD Pillar One aims to reallocate taxing rights to market countries based on the sales revenues of in-scope firms. This study theoretically investigates the implications of Pillar One by considering a global firm that conducts all its real activities in a tax haven and competes via prices in e-commerce with local firms in market countries. Our model identifies two core effects. First, all in-scope firms manipulate their routine profit threshold by increasing their total turnover. This reduces the reallocated tax base and crowds out the taxable profits of the local competitors. Second, for tax rate differentials, sales shifting emerges: the global firm increases prices in the high-tax country and books larger sales (and profits) in the low-tax country. Thus, the high-tax country suffers from lower tax revenue and greater market inefficiency, all else equal.

Despite the growing relevance of direct platform taxation, little is known about its economic effects. This paper uses domain-level web traffic data to study how the French DST affected internet usage patterns. I find that traffic to websites owned by the 23 companies likely subject to DST liabilities remained stable after tax implementation, while traffic to non-liable websites declined by approximately 3\% relative to other countries. This differential effect is consistent with DSTs operating through through the advertising market: higher advertising costs reduce the returns to quality investments for non-liable websites that depend on DST-liable platforms for traffic acquisition, while platform quality, net of advertising, remains largely unaffected by jurisdiction-specific taxes.

Profits are often created from activities across multiple jurisdictions. What is the optimal division of tax revenues across these jurisdictions? This paper addresses this question theoretically and empirically. First, we propose a new welfare function for fair division of profit tax revenues across jurisdictions, where jurisdictions' claims to revenue depend on how much of multinational corporations' capital, labour and sales are located within the jurisdiction. Second, we show how this theory can be applied to the optimal division of revenues when taxation distorts location decisions of corporate activities. Third, to speak to the extent of location responses, we exploit data on multinational corporations in the EU to estimate the current distribution of activities and the responsiveness of each activity to tax rate differentials. Fourth, using these results, we simulate optimal divisions of revenues for the EU under formula apportionment.

This paper extends the sufficient statistics approach to study international tax policy. International policy differs from domestic policies because i) from the perspective of domestic policy makers the welfare weight assigned to foreign agents is lower than that of domestic agents, and ii) behavioral changes by foreign agents have spillover effects on the domestic economy that are welfare relevant. I develop a tax and tax administration model that incorporates these features. I ask which elasticities are required to estimate the welfare effects of an international (tax) policy reform, considering variation in both the tax rate and tax administration. The sufficient statistics needed for welfare analysis are the elasticity of taxable income, the elasticity of factor prices, and the elasticity of the foreign input with respect to the policy variable of interest. I apply the approach to calculate the welfare effects of the US corporate tax and U.S. tariffs on imports.