The U.S. tax code allows multinational corporations to credit tax payments made to foreign treasuries against domestic tax obligations, up to their U.S. tax liability on foreign source income. If foreign tax payments exceed the U.S. tax liability on foreign source income the corporation is said to be in "excess credits." We study how the incentives for investment abroad through foreign subsidiaries change as parent corporations transit into and out of "excess credits." We also examine how the presence of foreign tax credit carryforwards affects tax-related investment incentives.
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Paper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number
199406.
Find related papers by JEL classification: H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
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