NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Tax Policy and the Activities of Multinational Corporations

James R. Hines, Jr.

NBER Working Paper No. 5589
Issued in May 1996
NBER Program(s):   ITI   PE

This paper reviews quantitative studies of the impact of international tax rules on the financial and real behavior of multinational firms. The evidence, much of it recent, indicates that taxation significantly influences foreign direct investment, corporate borrowing, transfer pricing, dividend and royalty payments, R&D activity, exports, bribe payments, and location choices. While taxes appear to influence a wide range of activity, the literature does not offer many subtle tests designed to distinguish different theories of the effects of taxation on multinational firms. The paper evaluates the reliability of existing evidence and its implications for the design of international tax policy.

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Document Object Identifier (DOI): 10.3386/w5589

Published: in Alan J. Auerbach, ed. Fiscal Policy: Lessons From Economic Research(Cambridge, MA: MIT Press, 1997), pp.401-445.

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