Tax

Abstract

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 I. THE U.S. RULES FOR TAXING FOREIGN INCOME AND THE NEW PLANNING STRUCTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 II. DATA SOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 III. COUNTRY AVERAGE EFFECTIVE TAX RATES, 1980-2000 . . . . . . . . 158 IV. TAX PLANNING AND CHANGES IN FIRM LEVEL EFFECTIVE TAX RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 V. EVIDENCE ON THE GROWTH OF INCOME SHIFTING AT THE SUBSIDIARY LEVEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 VI. EVIDENCE ON THE LOCATION OF INCOME AND REAL CAPITAL . . 166 VII. EVIDENCE ON TAX PLANNING IN THE BEA DATA . . . . . . . . . . . . . 166 VIII. THE DOUBLE COUNTING PROBLEM . . . . . . . . . . . . . . . . . . . . . . . 167 IX. IMPLICATIONS OF THE GROWTH OF EQUITY INCOME FROM FOREIGN AFFILIATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 X. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 152 Florida Tax Review [Vol.7:3 * Associate Professor of Economics, Rutgers University. ** Economist in the Office of Tax Analysis, U.S. Treasury. Nothing in this paper should be construed as reflecting the views and policy of the U.S. Treasury Department. We are grateful for comments from Paul McDaniel, Jack Mintz, Andrew Lyon and William Randolph. We thank Raymond Mataloni for help with the Department of Commerce data and Gordon Wilson for help with the tax return data. THE THREE PARTIES IN THE RACE TO THE BOTTOM: HOST GOVERNMENTS, HOME GOVERNMENTS AND MULTINATIONAL COMPANIES