U.S. tax policy and the overseas activities of U.S. multinational corporations: a quantitative assessment

Timothy Goodspeed () and Daniel Frisch

MPRA Paper from University Library of Munich, Germany

Abstract: We present 1984 data on U.S. multinationals, their foreign operations, and repatriations received from their controlled foreign corporations (CFCs), and explore the ramifications of the 1986 Tax Reform Act’s lowering of the corporate tax rate from 46 to 34 percent. We identify and quantify the effects on investment and financial decisions of U.S. multinationals that are attributed to the foreign tax credit and deferral. We find that the lowering of the rate has a large impact on excess credit positions, present evidence indicating that the composition of foreign source income has an important effect on such positions, find that the violation of capital export neutrality is likely to be widespread, and explore the impact of repealing deferral. The data relating to financial decisions shows mixed support for current theories.

Keywords: tax policy; multinationals; deferral; foreign tax credits; controlled foreign corporations; tax reform; 1986 Tax Reform Act (search for similar items in EconPapers)
JEL-codes: F23 H25 H87 (search for similar items in EconPapers)
Date: 1989-08-24
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:39389

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