Heads I win, tails you lose: Asymmetric taxes, risk taking, and innovation

• 成果类型: Article
• 署名作者: Albertus, James F.; Glover, Brent; Levine, Oliver
• 署名单位: Carnegie Mellon University; University of Wisconsin System; University of Wisconsin Madison
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2019.04.010
• 发表日期: 2019
• 页码: 24-40
• 关键词: Corporate risk taking; Multinational corporations; transfer pricing; taxation; Profit shifting; Tax avoidance; R&D; intellectual property; Corporate investment

摘要

When multinationals face lower tax rates abroad than in the US, transfer pricing strategies generate an asymmetry in the tax rates on a project's profits and losses. We show that the tax savings from transfer pricing can be expressed as a long position in a call option. We use a model to show that this transfer pricing call option leads a firm to choose riskier and larger projects than it would otherwise. Thus, transfer pricing strategies do not simply reduce a firm's taxes, they can influence the scale and types of projects undertaken. (C) 2019 Elsevier B.V. All rights reserved.