Corporate Taxation and International Financial Integration: U.S. evidence from a consolidated perspective

Agustín Bénétrix and André Sanchez

Oxford Open Economics, 2023, vol. 2, 47-66

Abstract: We document a robust relation between corporate tax differentials and US international financial integration (IFI). While this is the case for traditional IFI based on cross-border positions, the positive link also emerges for its larger consolidated-by-nationality version. The gap between these IFI measures, the key outcome variable in our analysis, exhibits a strong positive correlation with tax differentials too. This is in part due to consolidated assets of multinational enterprises being more strongly correlated with tax differentials than their cross-border counterpart. We interpret this as indirect evidence of US multinationals taking advantage of tax differentials in ways that go beyond what is captured by traditional Balance of Payments procedures.JEL: F36, F21, F23, H87.

Keywords: international financial integration; financial globalization; multinational enterprises; corporate taxation (search for similar items in EconPapers)
Date: 2023
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