Made in the U.S.A.? A Study of Firm Responses to Domestic Production Incentives

Rebecca Lester
Additional contact information
Rebecca Lester: Stanford University

Research Papers from Stanford University, Graduate School of Business

Abstract: How do U.S. companies respond to incentives intended to encourage domestic production and manufacturing? I study this question in the context of the Domestic Production Activities Deduction (DPAD), which was enacted in the American Jobs Creation Act of 2004 and is currently the second largest U.S. corporate tax expenditure. Specifically, I examine 1) whether and to what extent firms shift income to maximize the domestic manufacturing benefit, and 2) the extent that firms actually increase domestic investment and employment, measured using confidential data from the U.S. Bureau of Economic Analysis. While I find a positive effect of DPAD on domestic investment, I also find that DPAD firms shift income across time and across borders to maximize the tax benefit. These results show that changes in firm reporting are an important and economically significant response that has not been studied previously in this context. Additionally, these findings inform the ongoing policy debate on the possible extension or repeal of this tax incentive.

JEL-codes: F23 G38 H25 M40 (search for similar items in EconPapers)
Date: 2016-08
New Economics Papers: this item is included in nep-pbe
References: Add references at CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-download-auth/423621
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-download-auth/423621 [301 Moved Permanently]--> https://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-download-auth/423621)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:3471

Access Statistics for this paper

More papers in Research Papers from Stanford University, Graduate School of Business Contact information at EDIRC.
Bibliographic data for series maintained by ().