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International income shifting by US multinational corporations


  • Donald Rousslang


This paper provides estimates of the amount of income shifted across national borders within the manufacturing operations of US multinational corporations (MNCs) in 1988. It is assumed that each MNC arranges its investments such that, after accounting for income shifting opportunities, the after-tax rate of return on a marginal investment is the same for all its affiliates, regardless of location. The income shifting is then inferred by comparing shares of after-tax profits, assets and sales of the affiliated members. It is estimated that such shifting amounted to about $8 billion (on net), which is less than 4% of the worldwide taxable income of the manufacturing MNCs.

Suggested Citation

  • Donald Rousslang, 1997. "International income shifting by US multinational corporations," Applied Economics, Taylor & Francis Journals, vol. 29(7), pages 925-934.
  • Handle: RePEc:taf:applec:v:29:y:1997:i:7:p:925-934
    DOI: 10.1080/000368497326589

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    References listed on IDEAS

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    Cited by:

    1. Alfons Weichenrieder, 2009. "Profit shifting in the EU: evidence from Germany," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(3), pages 281-297, June.
    2. Ahmed, S., 2004. "Modelling corporate tax liabilities using company accounts: a new framework," Cambridge Working Papers in Economics 0412, Faculty of Economics, University of Cambridge.
    3. Fred Ramb & Alfons J. Weichenrieder, 2005. "Taxes and the Financial Structure of German Inward FDI," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(4), pages 670-692, December.
    4. An, Zhiyong & Tan, Congyan, 2014. "Taxation and income shifting: Empirical evidence from a quasi-experiment in China," Economic Systems, Elsevier, vol. 38(4), pages 588-596.
    5. Brandstetter, Laura, 2014. "Do Corporate Tax Cuts Reduce International Profit Shifting?," Discussion Papers 2014/10, Free University Berlin, School of Business & Economics.
    6. Brandstetter, Laura, 2014. "Do corporate tax cuts reduce international profit shifting," arqus Discussion Papers in Quantitative Tax Research 162, arqus - Arbeitskreis Quantitative Steuerlehre.
    7. Peter Schwarz, 2009. "Tax-avoidance strategies of American multinationals: an empirical analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(8), pages 539-549.

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