Do Multinationals or Domestic Firms Face Higher Effective Tax Rates?
AbstractTo our knowledge, this paper provides the most comprehensive analysis of firm-level corporate income tax expenses to date. We use publicly available financial statement information to estimate firm-level effective tax rates (ETRs) for 10,642 corporations from 85 countries from 1988 to 2007. We find that multinationals and domestic-only companies face similar ETRs. We also find that, on average, ETRs declined by seven percentage points or 20% over the period. German, Japanese, Australian and Canadian decreases were large. American, British, and French declines were more modest. Nonetheless, because ETRs were falling worldwide, the ordinal rank from high-tax countries to low-tax countries changed little. Japanese firms always faced the highest ETRs. ETRs for tax havens and countries from the Middle East and Asia (ignoring Japan) were always lower than those for the U.S. and European countries. These findings should provide some empirical underpinning for ongoing policy debates about the taxation of multinational profits.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15091.
Date of creation: Jun 2009
Date of revision:
Publication status: published as Markle, Kevin S. and Douglas A. Shackelford, 2012. Cross-country Comparisons of Corporate Income Taxes. NBER Working Paper 15091. National Tax Journal 65, 493-528.
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
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Find related papers by JEL classification:
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-03 (All new papers)
- NEP-BEC-2009-07-03 (Business Economics)
- NEP-PBE-2009-07-03 (Public Economics)
- NEP-SEA-2009-07-03 (South East Asia)
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- Lee, Namryoung & Swenson, Charles, 2012. "Are Multinational Corporate Tax Rules as Important as Tax Rates?," The International Journal of Accounting, Elsevier, vol. 47(2), pages 155-167.
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