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International Tax Avoidance and U.S. International Trade

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  • Clausing, Kimberly A.

Abstract

In the context of a model of profit–maximizing multinational firms, this paper demonstrates three types of influences that international tax avoidance is expected to have on international trade. International tax avoidance affects the location decisions of multinational firms as well as the prices and quantities of their intrafirm trade transactions. The paper then investigates hypotheses generated from these theoretical predictions using a panel data set on U.S. multinational firm operations. Evidence is found of a substantial and statistically significant relationship between tax avoidance incentives and the pattern of U.S. international trade.

Suggested Citation

  • Clausing, Kimberly A., 2006. "International Tax Avoidance and U.S. International Trade," National Tax Journal, National Tax Association;National Tax Journal, vol. 59(2), pages 269-287, June.
    • Handle: RePEc:ntj:journl:v:59:y:2006:i:2:p:269-87
    DOI: 10.17310/ntj.2006.2.05
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    File URL: https://doi.org/10.17310/ntj.2006.2.05
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    Cited by:

    1. Lisa De Simone & Lillian F. Mills & Bridget Stomberg, 2019. "Using IRS data to identify income shifting to foreign affiliates," Review of Accounting Studies, Springer, vol. 24(2), pages 694-730, June.
    2. Dorian Carloni & Daniel Fried & Molly Saunders-Scott, 2019. "The Effect of Tax-Motivated Transfer Pricing on U.S. Aggregate Trade Statistics: Working Paper 2019-05," Working Papers 55284, Congressional Budget Office.
    3. Frederick Bird & Thomas Vance & Peter Woolstencroft, 2009. "Fairness in International Trade and Investment: North American Perspectives," Journal of Business Ethics, Springer, vol. 84(3), pages 405-425, February.
    4. Liu, Xuepeng & Shi, Huimin & Ferrantino, Michael, 2016. "Tax evasion through trade intermediation: Evidence from Chinese exporters," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 518-535.
    5. Jost H. Heckemeyer & Michael Overesch, 2017. "Multinationals’ profit response to tax differentials: Effect size and shifting channels," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(4), pages 965-994, November.
    6. Anna Gumpert & James R. Hines, Jr. & Monika Schnitzer, 2011. "The Use of Tax Havens in Exemption Regimes," NBER Working Papers 17644, National Bureau of Economic Research, Inc.
    7. Clausing, Kimberly A. & Lahav, Yaron, 2011. "Corporate tax payments under formulary apportionment: Evidence from the financial reports of 50 major U.S. multinational firms," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 20(2), pages 97-105.
    8. Sebastian Beer & Ruud de Mooij & Li Liu, 2020. "International Corporate Tax Avoidance: A Review Of The Channels, Magnitudes, And Blind Spots," Journal of Economic Surveys, Wiley Blackwell, vol. 34(3), pages 660-688, July.
    9. Richardson, Grant & Taylor, Grantley & Lanis, Roman, 2013. "Determinants of transfer pricing aggressiveness: Empirical evidence from Australian firms," Journal of Contemporary Accounting and Economics, Elsevier, vol. 9(2), pages 136-150.
    10. Leibrecht, Markus & Rixen, Thomas, 2020. "Double Tax Avoidance and Tax Competition for Mobile Capital," SocArXiv dgw5k, Center for Open Science.
    11. Alfred Tran & Wanmeng Xu, 2024. "A study of cross‐border profit shifting channels: Evidence from Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 869-901, March.
    12. Brandstetter, Laura, 2014. "Do Corporate Tax Cuts Reduce International Profit Shifting?," Discussion Papers 2014/10, Free University Berlin, School of Business & Economics.
    13. Brandstetter, Laura, 2014. "Do corporate tax cuts reduce international profit shifting," arqus Discussion Papers in Quantitative Tax Research 162, arqus - Arbeitskreis Quantitative Steuerlehre.

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