Tax Planning and Multinational Behavior

Rosanne Altshuler, Lysle Boller, Kevin A. Roberts and Juan Carlos Suárez Serrato

No 35874, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We use newly linked IRS data to study how US multinationals use tax-planning structures that exploit mismatches between US and foreign tax laws. In 2016, these structures accounted for 36% of foreign profits despite being adopted by only 18% of firms. We develop and estimate a structural model using adoption patterns and changes in foreign effective tax rates, domestic and foreign investment, and global R&D following adoption. The model implies substantial heterogeneity in adoption costs and benefits and shows that restricting tax planning creates tradeoffs between tax revenue and economic activity that are amplified by global R&D linkages.

JEL-codes: D22 H25 H26 H32 (search for similar items in EconPapers)
Date: 2026-10
Note: PE
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