Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/79149
Authors: 
Altshuler, Rosanne
Grubert, Harry
Year of Publication: 
2002
Series/Report no.: 
Working Papers, Department of Economics, Rutgers, The State University of New Jersey 2002,01
Abstract: 
We approach the question of how moving to a dividend exemption system would affect the location incentives of U.S. corporations from three different angles. We start by comparing the U.S. allocation of foreign direct investment in manufacturing across low-tax versus high-tax jurisdictions with that of two major dividend exemption countries, Germany and Canada. The second section demonstrates how the effective tax rate on the typical investment in a low-tax affiliate would change under a dividend exemption system. The final approach uses data from the tax returns of U.S. multinationals to gauge how location decisions will be affected. Taken together, the analysis provides no consistent or definitive evidence that location decisions would be significantly changed if dividends were to be exempt from U.S. corporate tax.
Subjects: 
cost of capital
dividend exemption
international taxation
multinationals
territorial taxation
JEL: 
H25
H87
Document Type: 
Working Paper

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