This paper uses data aggregated from tax returns of more than 500 U.S. multinational corporations (MNCs) to identify the role of host country tax rates in determining the amount of capital invested in 60 potential locations. The empirical results show that average effective tax rates have a significant effect on the choice of a location and the amount of capital invested there. A lower tax rate that increases the after-tax return to capital by one percent is associated with about 3 percent more real capital invested if the country has an open trade regime. The attractive power of low tax rates is weakened if the country has a more restrictive trade regime. Approximately 19 percent of U.S. capital abroad would be in a different location in the absence of any effect of taxes.