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Recent Developments in the Debate on Deferral

  • Rosanne Altshuler

    ()

    (Rutgers University, Department of Economics)

In this paper, I attempt to bring the debate over deferral up to date. The paper is divided into three sections. The first starts with a review of traditional models of international tax systems to provide a basic understanding of the efficiency consequences of deferral. This section then proceeds to evaluate some of the theoretical arguments for deferral that have appeared in the most recent economic literature. The second section provides a brief overview of current U.S. tax policy toward foreign source income. This review provides the background necessary to evaluate results from the empirical economic literature on the impact of taxes on multinational firms. The third section explores how firms' economic behavior is affected by the availability of deferral on active profits. Understanding the behavioral responses of firms to home and host country taxation is necessary to evaluate the efficiency and revenue aspects of changes to the current deferral regime. As in the first section, the focus is on the most recent evidence available in the economic literature.

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Paper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 200013.

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Date of creation: 25 Jul 2000
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Handle: RePEc:rut:rutres:200013
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  1. Rosanne Altshuler & Harry Grubert, 1996. "Balance Sheets, Multinational Financial Policy, and the Cost of Capital at Home and Abroad," NBER Working Papers 5810, National Bureau of Economic Research, Inc.
  2. Alan J. Auerbach, 1980. "Wealth Maximization and the Cost of Capital," NBER Working Papers 0254, National Bureau of Economic Research, Inc.
  3. 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.
  4. Rosanne Altshuler & T. Scott Newlon & William C. Randolph, 1994. "Do Repatriation Taxes Matter? Evidence from the Tax Returns of U.S. Multinationals," NBER Working Papers 4667, National Bureau of Economic Research, Inc.
  5. Hines Jr., J.R., 1991. "Dividends And Profits: Some Unsubtle Foreign Influences," Papers 77, Princeton, Woodrow Wilson School - John M. Olin Program.
  6. Michael P. Devereux & R. Glenn Hubbard, 2000. "Taxing Multinationals," NBER Working Papers 7920, National Bureau of Economic Research, Inc.
  7. Slemrod, Joel, 1990. "Optimal Taxation and Optimal Tax Systems," Journal of Economic Perspectives, American Economic Association, vol. 4(1), pages 157-78, Winter.
  8. James R. Hines Jr., 1992. "Credit and Deferral as International Investment Incentives," NBER Working Papers 4191, National Bureau of Economic Research, Inc.
  9. Hans-Werner Sinn, 1990. "Taxation and the Birth of Foreign Subsidiaries," NBER Working Papers 3519, National Bureau of Economic Research, Inc.
  10. Michael Keen & Hannu Piekkola, 1996. "Simple rules for the optimal taxation of international capital income," IFS Working Papers W96/18, Institute for Fiscal Studies.
  11. David F. Bradford, 1979. "The Incidence and Allocation Effects of a Tax on Corporate Distributions," NBER Working Papers 0349, National Bureau of Economic Research, Inc.
  12. Assaf Razin & Joel Slemrod, 1990. "Taxation in the Global Economy," NBER Books, National Bureau of Economic Research, Inc, number razi90-1.
  13. Grubert, Harry & Mutti, John, 1991. "Taxes, Tariffs and Transfer Pricing in Multinational Corporate Decision Making," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 285-93, May.
  14. Goodspeed, T-J & White, A-D, 1996. "International taxation," Papers 96-11, Wellesley College - Department of Economics.
  15. Hartman, David G., 1985. "Tax policy and foreign direct investment," Journal of Public Economics, Elsevier, vol. 26(1), pages 107-121, February.
  16. W. J. Corlett & D. C. Hague, 1953. "Complementarity and the Excess Burden of Taxation," Review of Economic Studies, Oxford University Press, vol. 21(1), pages 21-30.
  17. Hines, James R. Jr., 1999. "The Case against Deferral: A Deferential Reconsideration," National Tax Journal, National Tax Association, vol. 52(n. 3), pages 385-404, September.
  18. Rosanne Altshuler & T. Scott Newlon & Joel Slemrod, 1993. "The Effects of U.S. Tax Policy on the Income Repatriation Patterns of U. S . Multinational Corporations," NBER Chapters, in: Studies in International Taxation, pages 77-116 National Bureau of Economic Research, Inc.
  19. Jason G. Cummins & R. Glenn Hubbard, 1994. "The Tax Sensitivity of Foreign Direct Investment: Evidence from Firm-Level Panel Data," NBER Working Papers 4703, National Bureau of Economic Research, Inc.
  20. David F. Bradford & Hugh J. Ault, 1989. "Taxing International Income: An Analysis of the U.S. System and Its Economic Premises," NBER Working Papers 3056, National Bureau of Economic Research, Inc.
  21. Hines, James R. Jr., 1999. "Lessons from Behavioral Responses to International Taxation," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 305-22, June.
  22. Thomas Horst, 1980. "A Note on the Optimal Taxation of International Investment Income," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 793-798.
  23. Michael Keen & David E. Wildasin, 2000. "Pareto Efficiency in International Taxation," CESifo Working Paper Series 371, CESifo Group Munich.
  24. Alfons Weichenrieder, 1996. "Anti-tax-avoidance provisions and the size of foreign direct investment," International Tax and Public Finance, Springer, vol. 3(1), pages 67-81, January.
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