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This paper updates a seminal study by Harry Grubert that suggested taxation is an important determinant of the location of U. S. business activity abroad (Grubert and Mutti. J 991). The present analysis yields three key findings. First, effective tax rates (ETRs) continue to influence U.S. Multinational Enterprises' (MNEs') location decisions, although our constant elasticity estimates are smaller than other researchers report. Second, the majority of our estimates demonstrate stability over the sample period, across several measures of business activity, and for two common tax rate specifications, finally, we address the potential endogeneity of the tax variable, and our instrumental variable estimates are larger than baseline elasticities, especially for current year investment and research and development (R&D). Keywords: taxation, business location, international taxation, multinational enterprise JEL Codes: F2, H2, I. INTRODUCTION Of the many aspects of international taxation that Harry Grubert pursued, one important interest was the influence of taxation on the location of real economic activity of U.S. [...]

This paper assesses the sensitivity of the operations of multinational corporations (MNCs) to host country taxation. The empirical analysis is based on two different measures of MNC activity by U.S. majority-owned foreign affiliates: panel data for aggregate real gross product in manufacturing that originates in a given host country and micro data for a single year regarding the likelihood of a firm locating in a given host country. The empirical estimates indicate that investment geared toward export markets, rather than the domestic market, is particularly sensitive to host country taxation, that this sensitivity appears to be greater in developing countries than developed countries, and that it is becoming greater over time. Keywords: Foreign direct investment; Corporate income taxation JEL classification. F2; H2

The efforts of states to boost their economic growth and welfare by introducing tax schemes that allocate higher burden on out-of-state residents have long been a controversial issue in state fiscal relations. A nonlinear six-region, seven-sector, four-factor general equilibrium model was developed to theoretically and empirically examine the long-run exporting and importing of regional taxes. The empirical assessment involved the investigation of the relationships between tax exporting and three aggregate measures of regional change. Findings indicate that the ability of states to implement tax structures that impose more of burden on out-of-state residents does not automatically help in regional economic growth and welfare. Moreover, it was found that evaluation of tax policy based on its ability to contribute to economic growth may confound if regional welfare is the major objective.

The United States is one of the few industrialized countries that retains a purely classical tax system in which business income is taxed at the corporate level and then any [...], We analyze various corporate tax integration plans in an international simulation model of the United States and the rest of the world The schemes considered include 'backward' integration in which interest and dividends are not deductible at the corporate level and are exempt at the shareholder level We distinguish between debt and equity flows, because integration often has opposite effects on them. Such offsetting effects are one reason full integration and dividend credit proposals have a small effect on international net investment positions. Nevertheless, if integration benefits are denied to foreigners, the lower net investment income foreigners receive can have significant effects on the long-run trade balance and sectoral outputs. These results differ from a closed-economy outcome, because higher United States income shifts output to nontraded goods, whose output would otherwise decline because of a larger noncorporate component. They also differ from a small open economy in which the cost of capital does not decline in the corporate sector. The results also contrast with an all-equity model in which an outflow of equity is not offset by an inflow of debt. Backward integration causes a large capital outflow, because foreigners derive no benefit if interest income is exempt from personal-level tax. As a result of the importance of debt, we also find, paradoxically, that an across-the-board increase in capital taxes may lead to a capital inflow.

The provisions of Section 337 of the Tariff Act of 1930 are different from those of the countervailing duty (CVD) and anti-dumping (AD) unfair trade laws. Section 337 has been found by the GATT council to be in violation of GATT Article III in providing preferential treatment for domestic goods over imports. US companies adopt Section 337 to protect intellectual property rights. The provisions of Section 337 are described, and theoretical contributions reviewed for assessing areas of trade, infringement, and the less favoured treatment of domestic and foreign goods.

BERNARD YEUNG [*] This article uses an event study to evaluate the anticipated results of the Uruguay Round on U.S. industry, Economists commonly use computable general equilibrium (CGE) models to [...]