Income Shifting in U.S. Multinational Corporations / David Harris, Randall Morck, Joel Slemrod, Bernard Yeung.

Format:

Book

Author/Creator:

Harris, David (David Garland)

Contributor:

National Bureau of Economic Research.

Morck, Randall.

Slemrod, Joel.

Yeung, Bernard.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3924.

NBER working paper series no. w3924

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1991.

Summary:

It is often claimed that multinational firms avoid taxes by shifting income from high-tax to low-tax countries. Using a five year panel of data for two hundred large U.S. manufacturing firms, we find that U.S. tax liability, as a fraction either of U.S. sales or U.S. assets, is related to the location of foreign subsidiaries in a way that is consistent with tax-motivated income shifting. Having a subsidiary in a tax haven, Ireland, or one of the "four dragon" Asian countries - all characterized by low tax rates - is associated with lower U.S. tax ratios. Having a subsidiary in a high-tax region is associated with higher U.S. tax ratios. These results suggest that U.S. manufacturing companies shift income out of high-tax countries into the U.S., and from the U.S. to low-tax countries. Such behavior certainly lowers worldwide tax liabilities for larger U.S. manufacturing companies and appears to significantly lower their U.S. tax liabilities as well.

Notes:

Print version record

December 1991.