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State Tax Haven Legislation and Corporate Income Tax Revenues

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  • Stephen J. Lusch
  • James Stekelberg

Abstract

In response to the rise of foreign tax haven usage by multinational corporations, several US states have enacted laws that require income from affiliated entities operating in tax haven jurisdictions to be included on the firm’s state income tax return. We examine the revenue effects of this legislation. Employing a variety of alternative empirical approaches including a difference-in-differences specification, state and year fixed effects regressions, and a synthetic control methodology, our results provide consistent evidence of a positive association between the enactment of tax haven legislation and state corporate income tax revenues in all enacting states except West Virginia. Our study contributes to the state tax policy literature and the literature on tax havens. Moreover, given that states continue to consider implementing, changing, or repealing tax haven legislation, our results inform this current policy debate.

Suggested Citation

  • Stephen J. Lusch & James Stekelberg, 2020. "State Tax Haven Legislation and Corporate Income Tax Revenues," Public Finance Review, , vol. 48(3), pages 354-383, May.
    • Handle: RePEc:sae:pubfin:v:48:y:2020:i:3:p:354-383
    DOI: 10.1177/1091142120914280
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    References listed on IDEAS

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    Cited by:

    1. Rickman, Dan S. & Wang, Hongbo, 2022. "Estimating the Economic Effects of US State and Local Fiscal Policy: A Synthetic Control Method Matched Regression Approach," MPRA Paper 112575, University Library of Munich, Germany.
    2. Dan S. Rickman & Hongbo Wang, 2024. "Estimating the economic effects of US state and local fiscal policy: A synthetic control method matching‐regression approach," Growth and Change, Wiley Blackwell, vol. 55(2), June.

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