The Exorbitant Tax Privilege

Thomas Wright and Gabriel Zucman

No 24983, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate and attempt to explain the evolution of the taxes paid by U.S. multinationals on their foreign profits since 1966. In the oil sector, taxes paid to oil-producing States have been contained, allowing U.S. firms to earn high after-tax returns. Foreign taxes fell abruptly after the first Gulf War. In sectors other than oil, the effective foreign tax rate has fallen by half since the late 1990s. Almost half of this decline owes to the rise of profit shifting to tax havens. The low foreign taxes paid by U.S. multinationals can explain half of the U.S. cross-border return differential.

JEL-codes: F62 H26 N52 (search for similar items in EconPapers)
Date: 2018-09
New Economics Papers: this item is included in nep-his and nep-pub
Note: DAE IFM PE
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