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Firm Incorporation Outside The U.S.: No Exodus Yet, Eric J. Allen, Susan C. Morse

Susan Cleary Morse

As one tax director told the Senate Finance Committee in 1999, the U.S. tax rules for multinationals with a U.S.-incorporated parent are onerous enough that even a U.S.-based company like Intel might sensibly choose to incorporate its parent outside the U.S, presumably in a tax haven jurisdiction. Is the recent positive trend in the proportion of U.S.-listed initial public offering firms incorporating outside the U.S. enough evidence to suggest that corporations are heeding the substance of that tax director’s advice? Our results indicate that it is not.

Only 210 firms, or about 7.2% of our sample of 2,911 firms that …