Contributions

  • Foley, C. Fritz. - Contributor
  • Hines, James R. - Contributor
  • National Bureau of Economic Research. - Contributor

Publication

2004 - National Bureau of Economic Research, Cambridge, Mass, District of Columbia

Language

English

Word Count

6,500 words, Guess

Page Count

26 pages

Identifiers

Description

"How does the opportunity to use tax havens influence economic activity in nearby non-haven countries? Analysis of affiliate-level data indicates that American multinational firms use tax haven affiliates to reallocate taxable income away from high-tax jurisdictions and to defer home country taxes on foreign income. Ownership of tax haven affiliates is associated with reduced tax payments by nearby non-haven affiliates, the size of the effect being equivalent to a 20.8 percent tax rate reduction. The evidence also indicates that use of tax havens indirectly stimulates the growth of operations in non-haven countries in the same region. A one percent greater likelihood of establishing a tax haven affiliate is associated with 0.5 to 0.7 percent greater sales and investment growth by non-haven affiliates, implying a complementary relationship between haven and non-haven activity. The ability to avoid taxes by using tax haven affiliates therefore appears to facilitate economic activity in non-haven countries within regions"--National Bureau of Economic Research web site.

Subjects

Links

Other Editions

  • Economic effects of regional tax havensNational Bureau of Economic Research2004-01-01

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