The Paradoxical Impact of Corporate Inversions on US Tax Revenue
69 Pages Posted: 21 Apr 2015 Last revised: 23 Aug 2016
Date Written: August 21, 2016
Corporate inversions – reorganizations that result in relocating corporate tax domiciles from the US to a foreign country – are alleged to cost the US Treasury billions of dollars in tax revenue. Contrary to these assertions, we find that that inverting firms pay no less taxes after the inversion than they did before. Moreover, contrary to the common belief, we estimate that the inversions result in US shareholders realizing $81,415.92 million in capital gains and annual increases in dividends of $9,959.37 million. Thus, paradoxically, inversions are likely to increase tax collections by the US Treasury.
Keywords: Cash, Tax, Mergers and Acquisitions
JEL Classification: M40, G34, H25, F23
Suggested Citation: Suggested Citation