Tax Spillovers from US Corporate Income Tax Reform

By Sebastian Beer, Alexander D Klemm, Thornton Matheson

July 13, 2018

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Format: Chicago

Sebastian Beer, Alexander D Klemm, and Thornton Matheson. Tax Spillovers from US Corporate Income Tax Reform, (USA: International Monetary Fund, 2018) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper describes, and where possible tentatively quantifies, likely tax spillovers from the U.S. corporate income tax reform that was part of the broader 2017 tax reform. It calculates effective tax rates under various assumptions, showing among other findings, how the interest limitation and the Foreign Derived Intangible Income provision can raise or reduce rates. It tentatively estimates that under constant policies elsewhere, the rate cut will reduce tax revenue from multinationals in other countries by on average 1.6 to 5.2 percent. If other countries react in line with historical reaction functions, the revenue loss from multinationals rises to an average of 4.5 to 13.5 percent. The paper also discusses profit-shifting, real location, and policy reactions from the more complex features of the reform.

Subject: Average effective tax rate, Corporate income tax, Effective tax rate, Marginal effective tax rate, Revenue administration, Tax policy, Taxes

Keywords: Average effective tax rate, Capital stock, Corporate Income Tax, Cost of capital, Effective tax rate, FAD tax rate database, Foreign tax credit, Global, Marginal effective tax rate, Profit Shifting, Rate of return, Spillover, Tax Competition, Tax rate response, Tax Reform, Tax revenue, Tax system, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/166
Stock No:

WPIEA2018166
ISBN:

9781484367544
ISSN:

1018-5941

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