US International Corporate Taxation after the Tax Cuts and Jobs Act

Kimberly A. Clausing

Journal of Economic Perspectives, 2024, vol. 38, issue 3, 89-112

Abstract: The root dilemma that informs the past, present, and future of US international taxation is the tension between two desiderata: protecting the corporate tax base from erosion and ensuring the competitiveness of US multinational firms in the world economy. This article begins by exploring that tension, discussing the evidence behind these competing policy goals. It then considers the international tax provisions of the Tax Cuts and Jobs Act of 2017. TCJA enacted transformative changes in US corporate tax policy, but it did not resolve long held policy concerns. While research on TCJA is in early stages, evidence indicates that TCJA substantially reduced corporate tax revenues, that TCJA's international provisions (as a whole) raised less revenue than expected, that offshoring and profit shifting remain large policy concerns, that changes in US multinational company competitiveness were mixed, and that underlying trends in wages and investment did not change due to TCJA. While TCJA was unable to resolve the tension between competitiveness and tax base protection, the Pillar 2 international tax agreement shows more promise in that regard. As countries throughout the world implement a "country-by-country" minimum tax on multinational income of 15 percent, this has the potential to disrupt long-standing arguments about international corporate taxation.

JEL-codes: E23 F23 G34 H25 H87 K34 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/jep.38.3.89 (application/pdf)
https://www.aeaweb.org/doi/10.1257/jep.38.3.89.ds (application/zip)

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:aea:jecper:v:38:y:2024:i:3:p:89-112

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/jep.38.3.89

Access Statistics for this article

Journal of Economic Perspectives is currently edited by Enrico Moretti

More articles in Journal of Economic Perspectives from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().