Did the Tax Cuts and Jobs Act Reduce Profit Shifting by US Multinational Companies?

Javier Garcia‐Bernardo · Petr Jánský · Gabriel Zucman

47 citations0/0 files storedNational Bureau of Economic Research

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Corporate Taxation and Avoidance Taxation and Legal Issues International Business and FDI

Abstract

The 2017 Tax Cut and Jobs Act reduced the US corporate tax rate and introduced provisions to curb profit shifting.We combine survey data, tax data, and firm financial statements to study the evolution of the geographical allocation of US firms' profits after the reform.The share of profits booked abroad by US multinationals fell 3-5 percentage points, driven by repatriations of intellectual property to the US.The share of foreign profits booked in tax havens remained stable around 50% between 2015 and 2020.Changes in the global allocation of profits are small overall, but some firms responded strongly.

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References

2014Taxing across Borders: Tracking Personal Wealth and Corporate Profits 2022The Missing Profits of Nations 2017Profit shifting of U.S. multinationals 2019Comparing UK Tax Returns of Foreign Multinationals to Matched Domestic Firms 2018PROFIT SHIFTING BEFORE AND AFTER THE TAX CUTS AND JOBS ACT 2018Measuring the Effects of Corporate Tax Cuts 2022Offshore Profit Shifting and Aggregate Measurement: Balance of Payments, Foreign Investment, Productivity, and the Labor Share 2017Offshore Profit Shifting and Aggregate Measurement: Balance of Payments, Foreign Investment, Productivity, and the Labor Share

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2023Rethinking capital and wealth taxation 2024Profit shifting of multinational corporations worldwide 2022Global profit shifting, 1975–2019 2024Tax Policy and Investment in a Global Economy 2025The real and financial effects of internal liquidity: Evidence from the Tax Cuts and Jobs Act 2024The Global Minimum Tax and the taxation of MNE profit

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