Do Multinationals or Domestic Firms Face Higher Effective Tax Rates?

Kevin S. Markle and Douglas Shackelford ()

No 15091, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: To our knowledge, this paper provides the most comprehensive analysis of firm-level corporate income tax expenses to date. We use publicly available financial statement information to estimate firm-level effective tax rates (ETRs) for 10,642 corporations from 85 countries from 1988 to 2007. We find that multinationals and domestic-only companies face similar ETRs. We also find that, on average, ETRs declined by seven percentage points or 20% over the period. German, Japanese, Australian and Canadian decreases were large. American, British, and French declines were more modest. Nonetheless, because ETRs were falling worldwide, the ordinal rank from high-tax countries to low-tax countries changed little. Japanese firms always faced the highest ETRs. ETRs for tax havens and countries from the Middle East and Asia (ignoring Japan) were always lower than those for the U.S. and European countries. These findings should provide some empirical underpinning for ongoing policy debates about the taxation of multinational profits.

JEL-codes: F23 H25 K34 M41 (search for similar items in EconPapers)
Date: 2009-06
New Economics Papers: this item is included in nep-bec, nep-pbe and nep-sea
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Published as Markle, Kevin S. and Douglas A. Shackelford, 2012. Cross-country Comparisons of Corporate Income Taxes. NBER Working Paper 15091. National Tax Journal 65, 493-528.

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