Do Taxes Influence Where U.S. Corporations Invest?
This paper uses data aggregated from tax returns of more than 500 U.S. multinational corporations (MNCs) to identify the role of host country tax rates in determining the amount of capital invested in 60 potential locations. The empirical results show that average effective tax rates have a significant effect on the choice of a location and the amount of capital invested there. A lower tax rate that increases the after-tax return to capital by one percent is associated with about 3 percent more real capital invested if the country has an open trade regime. The attractive power of low tax rates is weakened if the country has a more restrictive trade regime. Approximately 19 percent of U.S. capital abroad would be in a different location in the absence of any effect of taxes.
Volume (Year): 53 (2000)
Issue (Month): n. 4 (December)
|Contact details of provider:|| Postal: 725 15th St. NW #600. Washington, D.C. 20005-2109|
Fax: (202) 737-7308
Web page: http://www.ntanet.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sinn, H.W., 1990.
"Taxation And The Birth Of Foreign Subsidiaries,"
66, Princeton, Woodrow Wilson School - Discussion Paper.
- Rosanne Altshuler & Harry Grubert & T. Scott Newlon, 2000.
"Has U.S. Investment Abroad Become More Sensitive to Tax Rates?,"
in: International Taxation and Multinational Activity, pages 9-38
National Bureau of Economic Research, Inc.
- Rosanne Altshuler & Harry Grubert & T. Scott Newlon, 1998. "Has U.S. Investment Abroad Become More Sensitive to Tax Rates?," NBER Working Papers 6383, National Bureau of Economic Research, Inc.
- Rosanne Altshuler & T. Scott Newlon & Harry Grubert, 2002. "Has U.S. Investment Abroad Become More Sensitive to Tax Rates?," Departmental Working Papers 199806, Rutgers University, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:ntj:journl:v:53:y:2000:i:n._4:p:825-40. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Charmaine Wright)
If references are entirely missing, you can add them using this form.