The Effective Income Tax Experience of U.S. and Non-U.S. Multinationals
SSRN Electronic Journal
2019
- 3Citations
- 3,606Usage
- 3Captures
- 3Mentions
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Example: if you select the 1-year option for an article published in 2019 and a metric category shows 90%, that means that the article or review is performing better than 90% of the other articles/reviews published in that journal in 2019. If you select the 3-year option for the same article published in 2019 and the metric category shows 90%, that means that the article or review is performing better than 90% of the other articles/reviews published in that journal in 2019, 2018 and 2017.
Citation Benchmarking is provided by Scopus and SciVal and is different from the metrics context provided by PlumX Metrics.
Article Description
In this paper we examine whether, under pre-2018 tax law, a global firm reported a lower income tax expense simply because its publicly traded parent was incorporated outside the United States. Our study considers loss years as well as profit years and isolates the effect of the incorporation location of the parent by considering only U.S. and non-U.S. multi-national companies (MNCs) with a significant U.S. presence. We find that, in profit years, U.S. firms show an effective tax rate that is greater by 5 percentage points compared to non-U.S. firms. Conversely, in loss years, which make up approximately 30% of our sample, U.S. firms have better tax results, which can be expressed as an effective tax rate advantage of 4 percentage points among firms that do not record a valuation allowance. Our study demonstrates that the relative tax cost of organizing as a U.S. firm is smaller than some have suggested, and reinforces the importance of considering loss year results when evaluating tax policies. The results also suggest that the reduction in the U.S. corporate income tax rate under the 2017 Tax Cuts and Jobs Act, or TCJA, will provide smaller benefits to U.S.-parented corporations when loss years are also considered.
Bibliographic Details
http://www.ssrn.com/abstract=2887658; http://dx.doi.org/10.2139/ssrn.2887658; https://dx.doi.org/10.2139/ssrn.2887658; https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2887658; https://ssrn.com/abstract=2887658; https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957778; https://ssrn.com/abstract=2957778
Elsevier BV
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