The Revenue Consequences of Using Formula Apportionment to Calculate U.S. and Foreign-Source Income: A Firm-Level Analysis
AbstractThis paper examines the 1989–1993 publicly available financial reports of 46 U.S.-based multinationals to estimate the revenue implications of implementing a U.S. federal formula apportionment system. Ignoring behavioral responses, we estimate shifting to an equal-weighted, three-factor formula would have increased their U.S. tax liabilities by 38 percent, with an 81 percent increase for oil and gas firms. We find the firms report a lower percentage of their worldwide profits as American profits than their American share of assets, sales, or payroll. The results may be attributed to more profitable foreign operations, tax-motivated income shifting, or measurement error. Copyright Kluwer Academic Publishers 1998
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Bibliographic InfoArticle provided by Springer in its journal International Tax and Public Finance.
Volume (Year): 5 (1998)
Issue (Month): 1 (February)
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Web page: http://www.springerlink.com/link.asp?id=102915
formula apportionment; multinational taxation; revenue estimates; financial statements; accounting for income taxes;
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