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Do Multinationals or Domestic Firms Face Higher Effective Tax Rates?

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Author Info
Kevin S. Markle
Douglas Shackelford
Abstract

To 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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15091.

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Date of creation: Jun 2009
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Handle: RePEc:nbr:nberwo:15091

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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

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This page was last updated on 2009-12-3.

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