TY  - JOUR
AU  - Grubert,Harry
AU  - Slemrod,Joel
TI  - The Effect of Taxes on Investment and Income Shifting to Puerto Rico
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4869
PY  - 1994
Y2  - September 1994
UR  - http://www.nber.org/papers/w4869
L1  - http://www.nber.org/papers/w4869.pdf
N1  - Author contact info:
Harry Grubert
Department of the Treasury
E-Mail: harry.grubert@treasury.gov

Joel Slemrod
University of Michigan Business School
701 Tappan Street
Room R5396
Ann Arbor, MI  48109-1234
Tel: 734/936-3914
Fax: 734-615-4323
E-Mail: jslemrod@umich.edu
AB  - The income of Puerto Rican affiliates of U.S. corporations is essentially untaxed by either Puerto Rico or the U.S.  This lowers the tax penalty on real investment there, and also makes it attractive to shift reported taxable income from the U.S. parent corporation to the Puerto Rican affiliate.  Because the ability to shift income is affected by the presence of real operations, the true marginal effective tax rate on investment in Puerto Rico depends on the income shifting opportunities.
ER  -