Tax Effects on Foreign Direct Investment in the United States: Evidence from a Cross-Country Comparison

Abstract

This paper investigates how the tax system of the U.S. and the capitalexporting country combine to affect the flow of foreign direct investment (FOl) into the U.S. First, using aggregate data, it corroborates earlier work suggesting that the U.S. effective tax rate does influence the amount of FO! financed by transfers of funds, but not the amount financed by retained earnings.The data are then disaggregated by major capital-exporting countries to see if, as theory would suggest, FO! from countries which exempt foreign-source income from taxation is more sensitive to U.S. tax rates than FOl from countries which attempt to tax foreign-source income.The data ana'ysis does not revea' a c'ear differentia' responsiveness between these two groups of countries, suggesting either difficulties in accurately measuring effective tax rates or the availability of financial strategies which render the home country tax system immaterial in affecting the return on FDI.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 63 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.