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The Consequences of the Tax Cut and Jobs Act's International Provisions: Lessons from Existing Research

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  • Dhammika Dharmapala

Abstract

This paper discusses the potential consequences of the international tax provisions of the recent Tax Cut and Jobs Act (TCJA), drawing on existing research. It uses the observed behavior of firms during the 2005 repatriation tax holiday to infer the relative burdens created by the repatriation tax and by the TCJA's new "Global Intangible Low-Taxed Income" (GILTI) tax, and it concludes that the TCJA increases the tax burden on U.S. residence for many, and perhaps most, U.S. firms. It also argues that the GILTI and "Foreign-Derived Intangible Income" (FDII) provisions will create substantial distortions to the ownership of assets, both in the United States and around the world.

Suggested Citation

  • Dhammika Dharmapala, 2018. "The Consequences of the Tax Cut and Jobs Act's International Provisions: Lessons from Existing Research," National Tax Journal, National Tax Association;National Tax Journal, vol. 71(4), pages 707-728, December.
    • Handle: RePEc:ntj:journl:v:71:y:2018:i:4:p:707-728
    DOI: 10.17310/ntj.2018.4.06
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    Cited by:

    1. Thiess Büttner & Carolin Holzmann, 2019. "Switching from Worldwide to Territorial Taxation: Empirical Evidence of FDI Effects," CESifo Working Paper Series 7462, CESifo.
    2. Bradley S. Blaylock & Jimmy F. Downes & Mollie E. Mathis & Scott D. White, 2022. "Do bondholders incorporate expected repatriation taxes into their pricing of debt?," Review of Accounting Studies, Springer, vol. 27(4), pages 1457-1492, December.
    3. Azémar, Céline & Dharmapala, Dhammika, 2019. "Tax sparing agreements, territorial tax reforms, and foreign direct investment," Journal of Public Economics, Elsevier, vol. 169(C), pages 89-108.
    4. Dorine Boumans & Clemens Fuest & Carla Krolage & Klaus Wohlrabe, 2020. "Expected effects of the US tax reform on other countries: global and local survey evidence," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(6), pages 1608-1630, December.
    5. Makoto Hasegawa, 2023. "Territorial Tax Reform and Profit Shifting by US and Japanese Multinationals," National Tax Journal, University of Chicago Press, vol. 76(4), pages 771-804.
    6. Albertus, James F. & Glover, Brent & Levine, Oliver, 2022. "Foreign investment of US multinationals: The effect of tax policy and agency conflicts," Journal of Financial Economics, Elsevier, vol. 144(1), pages 298-327.
    7. Mindy Herzfeld, 2021. "Designing international tax reform: lessons from TCJA," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(5), pages 1163-1187, October.
    8. Dhammika Dharmapala, 2023. "The Consequences of the 2017 US International Tax Reform: A Survey of the Evidence," CESifo Working Paper Series 10802, CESifo.
    9. Anusha Chari, 2020. "The International Market for Corporate Control," NBER Working Papers 26843, National Bureau of Economic Research, Inc.
    10. Mr. Nigel A Chalk & Mr. Michael Keen & Ms. Victoria J Perry, 2018. "The Tax Cuts and Jobs Act: An Appraisal," IMF Working Papers 2018/185, International Monetary Fund.

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