NBER Working Papers and Publications
|January 1993||Income Shifting in U.S. Multinational Corporations|
with Randall Morck, Joel B. Slemrod
in Studies in International Taxation, Alberto Giovannini, R. Glenn Hubbard, and Joel Slemrod, editors
|December 1991||Income Shifting in U.S. Multinational Corporations|
with Randall Morck, Joel Slemrod, Bernard Yeung: w3924
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 ...