State Tax Haven Legislation and Corporate Income Tax Revenues

Stephen J. Lusch and James Stekelberg

Public Finance Review, 2020, vol. 48, issue 3, 354-383

Abstract: In response to the rise of foreign tax haven usage by multinational corporations, several US states have enacted laws that require income from affiliated entities operating in tax haven jurisdictions to be included on the firm’s state income tax return. We examine the revenue effects of this legislation. Employing a variety of alternative empirical approaches including a difference-in-differences specification, state and year fixed effects regressions, and a synthetic control methodology, our results provide consistent evidence of a positive association between the enactment of tax haven legislation and state corporate income tax revenues in all enacting states except West Virginia. Our study contributes to the state tax policy literature and the literature on tax havens. Moreover, given that states continue to consider implementing, changing, or repealing tax haven legislation, our results inform this current policy debate.

Keywords: tax havens; state tax haven legislation; state corporate income tax; state corporate income tax revenue (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:48:y:2020:i:3:p:354-383

DOI: 10.1177/1091142120914280

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