The Exorbitant Tax Privilege

21 Pages Posted: 17 Sep 2018 Last revised: 7 Apr 2021

See all articles by tom wright

tom wright

Government of the United Kingdom - HM Treasury

Gabriel Zucman

University of California, Berkeley - Department of Economics

Date Written: September 2018

Abstract

We estimate and attempt to explain the evolution of the taxes paid by U.S. multinationals on their foreign profits since 1966. In the oil sector, taxes paid to oil-producing States have been contained, allowing U.S. firms to earn high after-tax returns. Foreign taxes fell abruptly after the first Gulf War. In sectors other than oil, the effective foreign tax rate has fallen by half since the late 1990s. Almost half of this decline owes to the rise of profit shifting to tax havens. The low foreign taxes paid by U.S. multinationals can explain half of the U.S. cross-border return differential.

Suggested Citation

wright, tom and Zucman, Gabriel, The Exorbitant Tax Privilege (September 2018). NBER Working Paper No. w24983, Available at SSRN: https://ssrn.com/abstract=3246780

Tom Wright (Contact Author)

Government of the United Kingdom - HM Treasury

Gabriel Zucman

University of California, Berkeley - Department of Economics ( email )

579 Evans Hall
Berkeley, CA 94709
United States

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