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Lessons From Behavioral Responses to International Taxation

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  • Hines, James R. Jr.

Abstract

This paper considers the impact of international taxation on patterns of foreign direct investment and on the extent of international tax avoidance activity. Recent evidence indicates that taxation significantly influences the location of foreign direct investment, corporate borrowing, transfer pricing, dividend and royalty payments, and R&D performance. Reactions to worldwide tax rate differences, as well as to changes in international tax rules, provide important information concerning the extent to which taxpayers respond to incentives. The generally high degree of responsiveness in turn carries implications for the design of domestic as well as international tax policy.

Suggested Citation

  • Hines, James R. Jr., 1999. "Lessons From Behavioral Responses to International Taxation," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(2), pages 305-322, June.
    • Handle: RePEc:ntj:journl:v:52:y:1999:i:2:p:305-22
    DOI: 10.1086/NTJ41789395
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    References listed on IDEAS

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    1. Grubert, Harry, 1998. "Taxes and the division of foreign operating income among royalties, interest, dividends and retained earnings," Journal of Public Economics, Elsevier, vol. 68(2), pages 269-290, May.
    2. Feldstein, Martin & Hines, James R. & Hubbard, R. Glenn (ed.), 1995. "The Effects of Taxation on Multinational Corporations," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226240954, December.
    3. Collins, Jh & Shackelford, Da, 1992. "Foreign Tax Credit Limitations And Preferred Stock Issuances," Journal of Accounting Research, Wiley Blackwell, vol. 30, pages 103-124.
    4. Desai, Mihir A. & Hines Jr., James R., 1999. ""Basket cases": Tax incentives and international joint venture participation by American multinational firms," Journal of Public Economics, Elsevier, vol. 71(3), pages 379-402, March.
    5. James R. Hines & Eric M. Rice, 1994. "Fiscal Paradise: Foreign Tax Havens and American Business," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 149-182.
    6. Assaf Razin & Joel Slemrod, 1990. "Taxation in the Global Economy," NBER Books, National Bureau of Economic Research, Inc, number razi90-1, March.
    7. 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, December.
    8. Martin S. Feldstein & James R. Hines, Jr. & R. Glenn Hubbard, 1995. "Introduction to "The Effects of Taxation on Multinational Corporations"," NBER Chapters, in: The Effects of Taxation on Multinational Corporations, pages 1-6, National Bureau of Economic Research, Inc.
    9. Martin Feldstein & James R. Hines Jr. & R. Glenn Hubbard, 1995. "The Effects of Taxation on Multinational Corporations," NBER Books, National Bureau of Economic Research, Inc, number feld95-2, March.
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