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Multinational Firm Tax Avoidance and Tax Policy

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  • Clausing, Kimberly A.
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    Abstract

    This paper considers the tax policy consequences of both real and financial types of international tax avoidance, focusing on U.S. multinational firms over the period 1982–2004. First, income shifting is examined by estimating the relationship between U.S. affiliate profit rates and foreign country tax rates. Second, the effects of taxes on multinational firms’ real operations across countries are considered. Estimates of both financial and real responsiveness to tax rate differences among countries are used to calculate how profits would differ from their current levels absent tax incentives, and thus how U.S. government revenues are affected. Finally, several policy alternatives are discussed.

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    Bibliographic Info

    Article provided by National Tax Association in its journal National Tax Journal.

    Volume (Year): 62 (2009)
    Issue (Month): 4 (December)
    Pages: 703-25

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    Handle: RePEc:ntj:journl:v:62:y:2009:i:4:p:703-25

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    Cited by:
    1. Dwenger, Nadja & Steiner, Viktor, 2012. "Profit Taxation And The Elasticity Of The Corporate Income Tax Base: Evidence From German Corporate Tax Return Data," National Tax Journal, National Tax Association, National Tax Association, vol. 65(1), pages 118-50, March.
    2. Shafik Hebous, 2011. "Money at the Docks of Tax Havens: A Guide," CESifo Working Paper Series, CESifo Group Munich 3587, CESifo Group Munich.
    3. Chu, Hsun & Lai, Ching-Chong & Cheng, Chu-Chuan, 2013. "Tax Havens, Growth, and Welfare," MPRA Paper 52878, University Library of Munich, Germany, revised Sep 2013.
    4. Dhammika Dharmapala, 2014. "What Do We Know About Base Erosion and Profit Shifting? A Review of the Empirical Literature," CESifo Working Paper Series, CESifo Group Munich 4612, CESifo Group Munich.
    5. Desai, Mihir A. & Foley, C. Fritz & Hines, James R. Jr., 2011. "Tax Policy And The Efficiency Of U.S. Direct Investment Abroad," National Tax Journal, National Tax Association, National Tax Association, vol. 64(4), pages 1055-82, December.
    6. Clausing, Kimberly A., 2013. "Who Pays The Corporate Tax In A Global Economy?," National Tax Journal, National Tax Association, National Tax Association, vol. 66(1), pages 151-84, March.
    7. James R. Hines, 2010. "Treasure Islands," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 24(4), pages 103-26, Fall.
    8. Grubert, Harry, 2012. "Foreign Taxes And The Growing Share Of U.S. Multinational Company Income Abroad: Profits, Not Sales, Are Being Globalized," National Tax Journal, National Tax Association, National Tax Association, vol. 65(2), pages 247-81, June.
    9. Fuest, Clemens & Spengel, Christoph & Finke, Katharina & Heckemeyer, Jost H. & Nusser, Hannah, 2013. "Profit shifting and 'aggressive' tax planning by multinational firms: Issues and options for reform," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 13-078, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    10. Jost, Sven P. & Pfaffermayr, Michael & Winner, Hannes, 2010. "Transfer Pricing as a Tax Compliance Risk," Working Papers in Economics and Finance, University of Salzburg 2010-6, University of Salzburg.
    11. Heckemeyer, Jost H. & Overesch, Michael, 2013. "Multinationals' profit response to tax differentials: Effect size and shifting channels," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 13-045, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    12. Rosanne Altshuler & Barry Bosworth, 2011. "Fiscal Consolidation in America: The Policy Options," Departmental Working Papers, Rutgers University, Department of Economics 201120, Rutgers University, Department of Economics.
    13. Brandstetter, Laura, 2014. "Do Corporate Tax Cuts Reduce International Profit Shifting?," Discussion Papers, Free University Berlin, School of Business & Economics 2014/10, Free University Berlin, School of Business & Economics.
    14. Brandstetter, Laura, 2014. "Do corporate tax cuts reduce international profit shifting," arqus Discussion Papers in Quantitative Tax Research, arqus - Arbeitskreis Quantitative Steuerlehre 162, arqus - Arbeitskreis Quantitative Steuerlehre.
    15. Harry Grubert & Rosanne Altshuler, 2013. "Fixing the System: An Analysis of Alternative Proposals for the Reform of International Tax," Departmental Working Papers, Rutgers University, Department of Economics 201305, Rutgers University, Department of Economics.
    16. Bradley, Sebastien, 2012. "Investor Responses to Dividends Received Deductions: Rewarding Multinational Tax Avoidance?," School of Economics Working Paper Series, LeBow College of Business, Drexel University 2012-10, LeBow College of Business, Drexel University.

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