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Repatriation Taxes

Chadwick Curtis, Julio Garin and M. Saif Mehkari ()

Review of Economic Dynamics, 2020, vol. 36, 293-313

Abstract: We present a model of a multinational firm to quantify the effects of policy changes in repatriation tax rates. The framework captures the dynamic responses of the firm from the time a policy change is anticipated through its enactment, including its long-run effects. We find that failing to account for anticipatory behavior surrounding a reduction in repatriation tax rates overstates the amount of profits repatriated from abroad and underestimates tax revenue losses. We further show that policy changes have a relatively small impact on hiring and investment decisions if firms have relatively easy access to credit markets – as is the case for most multinational firms. Finally, by altering the relative price of holding assets abroad, news of a future reduction in repatriation tax rates acts as an implicit tax on repatriating funds today. We capture and quantify this "shadow tax." (Copyright: Elsevier)

Keywords: Tax reform; Repatriation taxes; Asset holding; Corporate tax (search for similar items in EconPapers)
JEL-codes: E60 F23 H25 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1016/j.red.2019.11.004

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