Do Strong Fences Make Strong Neighbors?
27 Pages Posted: 1 Aug 2010 Last revised: 13 Mar 2011
Date Written: June 1, 2010
Many features of U.S. tax policy towards multinational firms – including the governing principle of capital export neutrality, the byzantine system of expense allocation, and anti-inversion legislation – reflect the intuition that building “strong fences” around the United States advances American interests. This paper examines the interaction of a strong fences policy with the increasingly important global markets for corporate residence, corporate control and corporate equities. These markets provide opportunities for entrepreneurs, managers and investors to circumvent a strong fences policy. The paper provides simple descriptive evidence of the growing importance of these markets and considers the implications for U.S. tax policy.
Keywords: International Taxation, Initial Public Offerings, Mergers and Acquisitions, Foreign Direct Investment, Foreign Portfolio Investment
JEL Classification: H25
Suggested Citation: Suggested Citation