The effect of the tax reform act of 1986 on the location of assets in financial services firms

• 成果类型: Article; Proceedings Paper
• 署名作者: Altshuler, R; Hubbard, RG
• 署名单位: Rutgers University System; Rutgers University New Brunswick; Columbia University; National Bureau of Economic Research
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/S0047-2727(01)00174-8
• 发表日期: 2003
• 页码: 109-127
• 关键词: multinational; international taxation; investment policy; financial services; Tax Reform Act of 1986

摘要

This paper examines the effects of the Tax Reform Act of 1986 on the international location decisions of U.S. financial services firms. The Act included rule changes that made it substantially more difficult for U.S. firms to defer U.S. taxes on overseas financial services income held in low-tax jurisdictions. We use information from the tax returns of U.S. corporations to examine how local taxes affect the allocation of financial assets held abroad by financial services firms. We find that, before the Act, the location of reported assets in financial subsidiaries was responsive to differences in host country tax rates across jurisdictions. However, after the Act, differences in host country tax rates no longer explain the distribution of assets held in financial services subsidiaries abroad. Our results suggest that the tightening of the anti-deferral provisions applicable to financial services companies has been successful in diminishing the effect of host country income taxes on asset location decisions. (C) 2003 Elsevier Science B.V. All rights reserved.