Basket cases: Tax incentives and international joint venture participation by American multinational firms

• 成果类型: Article
• 署名作者: Desai, MA; Hines, JR
• 署名单位: University of Michigan System; University of Michigan; Harvard University; National Bureau of Economic Research
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/S0047-2727(98)00074-7
• 发表日期: 1999
• 页码: 379-402
• 关键词: joint ventures; foreign tax credit; Foreign direct investment; organizational form

摘要

This paper examines the impact of the U.S. Tax Reform Act of 1986 (TRA) on international joint ventures by American firms. The TRA mandates the use of separate baskets in calculating foreign tax credits on dividends received from each foreign corporation owned 50% or less by Americans - which greatly reduces the attractiveness of joint ventures, especially those in low-tax foreign countries. Since the effect of the TRA on joint ventures varies with foreign tax rates, the country-level pattern of subsequent joint venture activity illustrates the sensitivity of organizational form to tax considerations. The evidence indicates that American participation in international joint ventures fell sharply after 1986, particularly in low-tax countries. Moreover, joint ventures in low-tax countries use more debt and pay greater royalties to their American parents after 1986, reflecting their incentives to economize on dividend payments. (C) 1999 Elsevier Science S.A. All rights reserved. JEL classification: H87; F23; H25; L23.