Cross-Country Comparisons of the Effects of Leverage, Intangible Assets, and Tax Havens on Corporate Income Taxes

18 Pages Posted: 17 Oct 2012  

Kevin Markle

University of Iowa - Henry B. Tippie College of Business

Douglas A. Shackelford

University of North Carolina Kenan-Flagler Business School; National Bureau of Economic Research (NBER)

Date Written: September 12, 2012

Abstract

To our knowledge, this paper provides the most comprehensive analysis, to date, of the role of leverage, intangible assets, and tax havens in reducing firm-level corporate income taxes. Using publicly available financial statement information for 3,926 public corporations from 62 countries from 2005 to 2009, we find evidence consistent with multinationals lowering their current income tax expense by issuing long-term debt, relying disproportionately on intangibles in their production, and establishing subsidiaries in tax havens. We also find wide cross-country variation in the use of debt and intangibles, but little variation in the use of tax havens. American multinationals appear to use debt more than other countries to lower their taxes. Besides enhancing our knowledge about international taxes, these findings should provide some empirical underpinning for ongoing policy debates about the taxation of multinationals.

Keywords: Tax, Tax Havens, International

JEL Classification: H25

Suggested Citation

Markle, Kevin and Shackelford, Douglas A., Cross-Country Comparisons of the Effects of Leverage, Intangible Assets, and Tax Havens on Corporate Income Taxes (September 12, 2012). Tax Law Review, Vol. 65, No. 3, 2012; UNC Kenan-Flagler Research Paper No. 2013-25. Available at SSRN: https://ssrn.com/abstract=2161939

Kevin Markle (Contact Author)

University of Iowa - Henry B. Tippie College of Business ( email )

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Douglas A. Shackelford

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
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United States
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