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The Impact of the Tax Cuts and Jobs Act on Foreign Investment in the United States

2022-05-06 Business & Economics
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Release : 2022-05-06
Genre : Business & Economics
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Book Synopsis The Impact of the Tax Cuts and Jobs Act on Foreign Investment in the United States by : Mr. Alexander D Klemm

Download or read book The Impact of the Tax Cuts and Jobs Act on Foreign Investment in the United States written by Mr. Alexander D Klemm. This book was released on 2022-05-06. Available in PDF, EPUB and Kindle. Book excerpt: The 2017 Tax Cuts and Jobs Act (TCJA) sharply reduced effective corporate income tax rates on equity-financed US investment. This paper examines the reform’s impact on US inbound foreign direct investment (FDI) and investment in property, plant and equipment (PPE) by foreign-owned US companies. We first model effective marginal and average tax rates (EMTRs and EATRs) by country, industry, and method of finance, and then use those tax rates to calculate the tax semi-elasticities of inbound FDI and PPE investment. We find that both PPE investment and FDI financed with retained earnings responded positively to the TCJA reform, but FDI financed with new equity or debt did not. In country-level PPE regressions, inclusion of macroeconomic controls renders tax rate coefficients insignificant, suggesting that the increase in PPE investment after TCJA was driven by general economic growth. In regressions of FDI financed with retained earnings, however, tax coefficients were robust to inclusion of macroeconomic controls. As the literature predicts, EATRs have a greater impact on cross-border investment than EMTRs. Country-by-industry regressions showed a larger effect of taxes on PPE investment than aggregate country-level regressions, but industry-level tax rates appear to have no effect on earnings retention.

The Impact of the Tax Cuts and Jobs Act on Foreign Investment in the United States

2022
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Release : 2022
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Book Synopsis The Impact of the Tax Cuts and Jobs Act on Foreign Investment in the United States by : Thornton Matheson

Download or read book The Impact of the Tax Cuts and Jobs Act on Foreign Investment in the United States written by Thornton Matheson. This book was released on 2022. Available in PDF, EPUB and Kindle. Book excerpt:

The Effect of the Tax Cuts and Jobs Act on Foreign Investment of U.S. Multinational Corporations

2022
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Release : 2022
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Book Synopsis The Effect of the Tax Cuts and Jobs Act on Foreign Investment of U.S. Multinational Corporations by : David Martin Pankraz Samuel

Download or read book The Effect of the Tax Cuts and Jobs Act on Foreign Investment of U.S. Multinational Corporations written by David Martin Pankraz Samuel. This book was released on 2022. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the effect of the 2017 Tax Cuts and Jobs Act (TCJA) on capital investment, labor investment, and the productivity of foreign subsidiaries of U.S. multinational corporations (MNCs). Proponents of the TCJA argue it decreased foreign investment by leveling the playing field between U.S. MNCs and foreign-owned corporations. However, policymakers are currently debating international tax reform, arguing that the TCJA incentivizes foreign investment. My study informs this debate by providing empirical evidence on the TCJA's effect on foreign investment and productivity. Using a difference-in-differences design, I find that after the TCJA, U.S.-owned foreign subsidiaries invest 13.1 percent less in capital and 1.3 percent less in labor relative to subsidiaries owned by non-U.S. MNCs. I also find these reductions are positively associated with subsidiary-level productivity, suggesting that the TCJA alleviates inefficiencies of the previous tax regime.

Tax Withholding and Estimated Tax

1993 Tax revenue estimating
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Release : 1993
Genre : Tax revenue estimating
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Book Synopsis Tax Withholding and Estimated Tax by :

Download or read book Tax Withholding and Estimated Tax written by . This book was released on 1993. Available in PDF, EPUB and Kindle. Book excerpt:

Tax Cuts and Jobs Act

2021 Business enterprises
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Release : 2021
Genre : Business enterprises
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Book Synopsis Tax Cuts and Jobs Act by : United States. Government Accountability Office

Download or read book Tax Cuts and Jobs Act written by United States. Government Accountability Office. This book was released on 2021. Available in PDF, EPUB and Kindle. Book excerpt: TCJA made sweeping changes to taxing U.S. corporations' international activities: (1) a transition tax on untaxed overseas earnings of foreign subsidiaries that accrued prior to 2017; (2) a tax on the net income earned by foreign subsidiaries exceeding a specified threshold of certain assets; (3) a deduction for income from certain foreign-derived sales of property or services exceeding a specified threshold of certain assets; and (4) a tax on certain payments made to a related foreign party referred to as base erosion payments. This report: (1) describes how TCJA's international provisions may be affecting U.S.-based corporations' international business activities; and (2) assesses IRS's and Treasury's development of relevant regulations and guidance to implement the provisions. GAO makes three recommendations to Treasury and IRS: develop more specific paperwork burden estimates for future TCJA regulations; quantify anticipated benefits and costs of these regulations; and identify ways to obtain public comment for significant guidance when appropriate.

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