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Tax Policy And The Efficiency Of U.S. Direct Investment Abroad, Mihir A. Desai, C. Fritz Foley, James R. Hines Jr.
Tax Policy And The Efficiency Of U.S. Direct Investment Abroad, Mihir A. Desai, C. Fritz Foley, James R. Hines Jr.
Articles
Deferral of U.S. taxes on foreign source income is commonly characterized as a subsidy to foreign investment, as reflected in its inclusion among “tax expenditures” and occasional calls for its repeal. This paper analyzes the extent to which tax deferral and other policies inefficiently subsidize U.S. direct investment abroad. Investments are dynamically inefficient if they consistently generate less in returns to investors than they absorb in new investment funds. From 1982–2010, repatriated earnings from foreign affiliates exceeded net capital investments by $1.1 trillion in 2010 dollars, and from 1950–2010, repatriated earnings and net interest from foreign affiliates exceeded net equity …
Reply To Becker And Fuest, James R. Hines Jr.
Reply To Becker And Fuest, James R. Hines Jr.
Articles
It is an understatement to say that the appropriate taxation of foreign business income is a controversial and potentially confusing topic. One of the mysteries of international taxation has been that the prescriptions of what, until recently, was the accepted academic wisdom differs so sharply from widespread international practice. In an important contribution, Richman (1963) noted that a home government confronted with the choice of where it would prefer one of its resident taxpayers to allocate a single unit of capital would weigh the after-foreign-tax return from investing abroad against the pre-tax return from investing at home. From this observation, …