Barriers to Mobility: The Lockout Effect of U.S. Taxation of Worldwide Corporate Profits
John R. Graham
Duke University; National Bureau of Economic Research (NBER)
Massachusetts Institute of Technology (MIT) - Sloan School of Management
Terry J. Shevlin
University of California-Irvine
August 25, 2010
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.
Number of Pages in PDF File: 51
Keywords: Repatriation, Tax, American Jobs Creation Act, Homeland Investment Act, Dividends Received Deduction, Trapped Equity, International Tax, Trapped Cash, Section 965, Stimulus, Tax Amnesty
JEL Classification: H20, G32, G38, G35, M40, G15
Date posted: December 17, 2008 ; Last revised: September 1, 2010
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