Income Shifting in U.S. Multinational Corporations

Harris, David B.; Mørck, Randall; Slemrod, Joel; Yeung, Bernard

doi:10.3386/w3924

Cited by 123 publications

(112 citation statements)

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Section: International Taxation and The Role Of Tax Havensmentioning

confidence: 99%

“…2 This study's emphasis on the role of haven activities is closest in spirit to Harris et al (1993) and Hines and Rice (1994). Harris et al (1993) report that the U.S. tax liabilities of American firms with tax haven affiliates are significantly lower than those of otherwise-similar American firms over the 1984-1988 period, which may be indirect evidence of tax-motivated 4 income reallocation by firms with tax haven affiliates. Hines and Rice (1994) regress the profitability of all U.S.-owned affiliates in 59 countries against productive inputs and local tax rates and also identify tax havens specifically, dividing havens into the seven large countries with populations exceeding one million in 1982, the "Big 7," and all other tax havens, the socalled "Dots."…”

Section: International Taxation and The Role Of Tax Havensmentioning

confidence: 99%

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The demand for tax haven operations

Desai

Foley

Hines

2006

Journal of Public Economics

418

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Section: International Taxation and The Role Of Tax Havensmentioning

confidence: 99%

Section: International Taxation and The Role Of Tax Havensmentioning

confidence: 99%

The demand for tax haven operations

Desai

Foley

Hines

2006

Journal of Public Economics

418

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“…due to a change in the government in either country or to a study and policy review by an existing government. 10 From a technical viewpoint, the convex specification of the enforcement cost function is needed for analytical tractability. This allows us to find a closed-form solution to the equilibrium enforcement policy which depends on the ownership structure of MNEs and on trade costs.…”

Section: The Modelmentioning

confidence: 99%

“…We also refer the reader to Gresik (2001) and Gordon and Hines (2002) for an overview of the theoretical literature on international taxation and of its connections with empirical observations. 2 See, e.g., Jenkins and Wright (1975), Grubert and Mutti (1991), Harris et al (1993), Grubert, Goodspeed and Swenson (1993), Hines and Rice (1994). 3 Her estimates indicate that a tax rate 1 percent lower in the country of destination (origin)…”

Section: Introductionmentioning

confidence: 99%

Investment Liberalization and the Geography of Firm Location

Amerighi¹

2008

Foreign Direct Investment and the Multinational Enterprise

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We set up a symmetric two-country model with two multinationals competing on the quantities and possibly manipulating their transfer prices.Governments choose both the corporate profit tax rate and the level of enforcement of the "arm's length" principle. We show that stronger enforcement increases equilibrium tax rates. We also find that a larger international ownership of multinationals leads to a "race to the top" in both policies between the two countries, while trade liberalization initially implies a "race to the bottom". But as trade becomes free enough, a further decrease in trade costs raises equilibrium tax rates and enforcement policies.

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“…However, in 1987 firms began shifting to the U.S. from Europe. In an interesting extension of Harris et al (1993), Jacob (1996 studies whether the cross-sectional variation in the volume of intra-firm trade explains the link between profitability in geographic segments and tax rates. Basically, Jacob shows that firms with a greater opportunity (or flexibility) to shift income are more likely to income shift.…”

Section: Empirical Evidencementioning

confidence: 99%

The Taxation of Multinational Corporations

Blouin

1996

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Multinational taxation is an area of research that encompasses academics in accounting, finance and economics. In particular, researchers are interested in determining whether taxation alters where multinational corporations (MNCs) operate their businesses. A review of the literature on foreign direct investment provides clear support for taxes influencing MNCs' location decisions. In addition, MNCs appear to organize themselves in a manner to increase the amount of their profitsinvested in relatively lightly taxed jurisdictions. By altering the location and the character of income across jurisdictions, MNCs are able to reduce their tax burdens. The natural extension of these lines of research, then, is determining the welfare consequences of MNCs' sensitivity to taxation. This review aggregates the large body of international tax literature succinctly in one location. Very little of what is incorporated in this piece is novel. Rather, it borrows heavily from those researchers who have focused their careers on understanding taxation in the multinational context. Unfortunately, because the research in this area is dominated by work involving U.S. data, the review is also quite U.S.-centric. However, many countries' multinational tax rules are quite similar. This is primarily attributable to the conformity generated in tax treaties based on the model treaty outlined by the Organization for Economic Cooperation and Development (OECD). So, although there is variation in specific tax rules across jurisdictions, the basic tax rules are very homogeneous.

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Income Shifting in U.S. Multinational Corporations

Cited by 123 publications

References 0 publications

The demand for tax haven operations

The demand for tax haven operations

Investment Liberalization and the Geography of Firm Location

The Taxation of Multinational Corporations

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