Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/271954 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10310
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We exploit the 2017 US tax reform to learn about the tax-competitiveness of US multinational corporations (MNCs) relative to their international peers. Matching on the propensity score, we compare pairs of similar US and European firms listed on the S&P500 or StoxxEurope600 in a difference-in-differences setting. Our results suggest significantly lower effective tax rates of US MNCs compared to their European competitors after the US tax reform. Additional tests show (i) that US MNCs have gained substantially in what we call tax-competitiveness, (ii) that the reform effect is more pronounced for MNCs with a high share of domestic activity, and (iii) that the tax reform did not change the international tax-planning behavior of US MNCs. We provide evidence that US MNCs already successfully engaged in international tax planning prior to the reform, and this behavior is unchanged after the tax reform.
Subjects: 
effective tax rate
tax reform
tax-competitiveness
tax avoidance
pair matching
difference-in-differences analysis
profit shifting
JEL: 
H25
H26
K34
Document Type: 
Working Paper
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