Bøger af Harry Grubert

U.S. corporations controlled by foreigners continue to report lower net income in relation to total receipts than comparable domestically-controlled corporations. But the 2004 tax return data show that, in manufacturing and the entire nonfinancial sector, the discrepancy disappears when using a measure of operating income that focuses on the corporations' activities in the United States. To determine operating income, dividends, interest and royalties are subtracted from net income and interest paid, depreciation, amortization, and depletion are added back to net income. Domestically-controlled corporations receive much greater dividend and royalty income, mainly from their subsidiaries abroad.

The foreign share of the worldwide income of U.S. multinational corporations (MNCs) has risen sharply in recent years. Data from a panel of 754 large MNCs indicate that the MNC foreign income share increased by 14 percentage points from 1996 to 2004. The differential between a company's U.S. and foreign effective tax rates exerts a significant effect on the share of its income abroad, largely through changes in foreign and domestic profit margins rather than a shift in sales. U.S.-foreign tax differentials are estimated to have raised the foreign share of MNC worldwide income by about 12 percentage points by 2004. Lower foreign effective tax rates had no significant effect on a company's domestic sales or on the growth of its worldwide pre-tax profits. Lower taxes on foreign income do not seem to promote "competitiveness."

The authors consider capital inflows into the United States and the likely consequences of a simplification of the taxation of international transactions.