Full Citation
Title: Unintended Consequences of Eliminating Tax Havens
Citation Type: Working Paper
Publication Year: 2018
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Abstract: We show that eliminating firms' access to tax havens has unintended consequences for economic growth. We analyze a policy change that limited profit shifting for US multinationals, and show that the reform raised the effective cost of investing in the US. Exposed firms respond by reducing global investment and shifting investment abroad-which lowered their domestic investment by 38%-and by reducing domestic employment by 1.0 million jobs. We then show that the costs of eliminating tax havens are persistent and geographically concentrated, as more exposed local labor markets experience declines in employment and income growth for over 15 years. We discuss implications of these results for other efforts to limit profit shifting, including new taxes on intangible income in the Tax Cuts and Jobs Act of 2017.
Url: http://www.nber.org/papers/w24850
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Authors: Serrato, Juan Carlos Suarez
Series Title: NBER Working Paper Series
Publication Number: 24850
Institution: National Bureau of Economic Research
Pages: 112
Publisher Location: Cambridge, MA
Data Collections: IPUMS USA
Topics: Other, Poverty and Welfare
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