Coming Home to America: Dividend Repatriations by U.S. Multinationals / James R. Hines, Jr., R. Glenn Hubbard.

Format:

Book

Author/Creator:

Hines, James R, Jr.

Contributor:

National Bureau of Economic Research.

Hubbard, R. Glenn.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2931.

NBER working paper series no. w2931

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Coming Home to America

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1989.

Summary:

This paper analyzes the financial flows from foreign subsidiaries of American multinational corporations to their parent corporations in the U.S. These repatriations are important not only to U.S. investors, who thereby have access to those funds, but also to the U.S. government, which generally does not tax foreign earnings of controlled foreign corporations until they are repatriated. The paper reviews the current tax system as applied to multinational firms, and considers the incentives it creates for various intra-firm financial transactions (in particular, the form of repatriations). These incentives appear to be inconsistent with historical repatriation patterns from aggregate time-series data on the overseas operations of U.S. multinationals. To resolve this inconsistency, we explore the determinants of distributions by foreign subsidiaries to their U.S. parent corporations, using new micro data on 12,041 controlled foreign corporations (and their 453 U.S. parents) collected from tax returns for 1984. This source exposes variations in distribution patterns not detectable in aggregate data. In particular, the data suggest that most subsidiaries paid no dividends to their parents in 1984, and that the U.S. government collected very little revenue on their foreign income while distorting their internal financial transactions.

Notes:

Print version record

April 1989.