Expected Effects of the Us Tax Reform on Other Countries: Global and Local Survey Evidence

23 Pages Posted: 21 Feb 2019

See all articles by Dorine Boumans

Dorine Boumans

CESifo (Center for Economic Studies and Ifo Institute)

Clemens Fuest

ifo Institute – Leibniz Institute for Economic Research at the University of Munich; Ludwig-Maximilians-University, Munich; Center for Economic Studies (CES)

Carla Krolage

University of Mannheim - Mannheim Research Institute for the Economics of Aging (MEA)

Klaus Wohlrabe

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Date Written: 2019

Abstract

The Tax Cuts and Jobs Act constitutes the largest change to the US tax system since the 1980s and thoroughly alters the way in which multinational companies are taxed. Current assessments on the reform’s international impact vary widely. This article sheds light on the tax reform’s expected effects on other countries. We first use representative German business survey data to analyse the impact of the reform on German firms. Many firms with substantial US revenues or production capacities in the US intend to expand US investment in response to the reform, in particular large firms and manufacturing companies. The effects on investment in Germany are ambiguous: While some firms substitute between investment locations, others expand in both countries. We subsequently extend our analysis to the global level using worldwide survey data. The results suggest a negative impact on tax revenues and investment in countries with close economic ties to the US.

Keywords: US tax reform, corporate tax, firm responses, survey, Germany

JEL Classification: H250, H320, H710, E620, F620

Suggested Citation

Boumans, Dorine and Fuest, Clemens and Krolage, Carla and Wohlrabe, Klaus, Expected Effects of the Us Tax Reform on Other Countries: Global and Local Survey Evidence (2019). CESifo Working Paper No. 7491. Available at SSRN: https://ssrn.com/abstract=3338847

Dorine Boumans (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Clemens Fuest

ifo Institute – Leibniz Institute for Economic Research at the University of Munich

Poschinger Str. 5
Munich, DE 81679
Germany
++89-9224-1430 (Phone)

Ludwig-Maximilians-University, Munich ( email )

Schackstrasse 4 / II
Munich, DE 80539
Germany

Center for Economic Studies (CES) ( email )

Schackstr. 4
Munich, DE 80539
Germany
++89 2180-2748 (Phone)
++89 2180-17845 (Fax)

Carla Krolage

University of Mannheim - Mannheim Research Institute for the Economics of Aging (MEA) ( email )

D-68131 Mannheim
Germany

Klaus Wohlrabe

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
51
Abstract Views
211
rank
391,636
PlumX Metrics