The Revenue Consequences of Using Formula Apportionment to Calculate U.S. and Foreign-Source Income: A Firm-Level Analysis
This 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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Volume (Year): 5 (1998)
Issue (Month): 1 (February)
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- Roger H. Gordon & John D. Wilson, 1984. "An Examination of Multijurisdictional Corporate Income Taxes Under Formula Apportionment," NBER Working Papers 1369, National Bureau of Economic Research, Inc.
- Bucks, Dan R. & Mazerov, Michael, 1993. "The State Solution to the Federal Government's International Transfer Pricing Problem," National Tax Journal, National Tax Association, vol. 46(3), pages 385-92, September.
- Daniel Frisch, 1983. "Issues in the Taxation of Foreign Source Income," NBER Chapters,in: Behavioral Simulation Methods in Tax Policy Analysis, pages 289-332 National Bureau of Economic Research, Inc.
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- James R. Hines, Jr. & Eric M. Rice, 1990. "Fiscal Paradise: Foreign Tax Havens and American Business," NBER Working Papers 3477, National Bureau of Economic Research, Inc.
- Bucks, Dan R. & Mazerov, Michael, 1993. "The State Solution to the Federal Government's International Transfer Pricing Problem," National Tax Journal, National Tax Association, vol. 46(3), pages 385-392, September.
- Alberto Giovannini & R. Glenn Hubbard & Joel Slemrod, 1993. "Studies in International Taxation," NBER Books, National Bureau of Economic Research, Inc, number giov93-1, October.
- Randall Morck, 2006. "Corporations," Harvard Institute of Economic Research Working Papers 2101, Harvard - Institute of Economic Research.
- Giovannini, Alberto & Hubbard, R. Glenn & Slemrod, Joel (ed.), 1993. "Studies in International Taxation," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226297019, September. Full references (including those not matched with items on IDEAS)
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