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Barriers to Mobility: The Lockout Effect of U.S. Taxation of Worldwide Corporate Profits

Graham, John R., Hanlon, Michelle, and Shevlin, Terry

Abstract:

Using data from a survey of tax executives, we examine the corporate response to the one-time dividends received deduction in the American Jobs Creation Act of 2004. We describe the firms’ reported sources and uses of the cash repatriated and we also examine non-tax costs companies incurred to avoid the repatriation tax prior to the Act. Finally, we examine whether firms would repatriate cash again if a similar Act were to occur in the future. Overall, the evidence is consistent with a substantial lockout effect resulting from the current U.S. policy of taxing the worldwide profits of U.S. multinationals.

Citation

Graham, John R., Hanlon, Michelle, and Shevlin, Terry (2010), Barriers to Mobility: The Lockout Effect of U.S. Taxation of Worldwide Corporate Profits, National Tax Journal, 63:4, pp. 1111-1144

DOI: dx.doi.org/10.17310/ntj.2010.4S.12