Genomic and phenomic screens for flower related RING type ubiquitin E3 ligases in Arabidopsis

Flowering time control integrates endogenous as well as environmental signals to promote flower development. The pathways and molecular networks involved are complex and integrate many modes of signal transduction. In plants ubiquitin mediated protein degradation pathway has been proposed to be as important mode of signaling as phosphorylation and transcription. To systematically study the role of ubiquitin signaling in the molecular regulation of flowering we have taken a genomic approach to identify flower related Ubiquitin Proteasome System components. As a large and versatile gene family the RING type ubiquitin E3 ligases were chosen as targets of the genomic screen. To this end the complete list of Arabidopsis RING E3 ligases were retrieved and verified in the Arabidopsis genome v11. Their differential expression was used for their categorization into flower organs or developmental stages. Known regulators of flowering time or floral organ development were identified in these categories through literature search and representative mutants for each category were purchased for functional characterization by growth and morphological phenotyping. To this end, a workflow was developed for high throughput phenotypic screening of growth, morphology and flowering of nearly a thousand Arabidopsis plants in one experimental round.Peer reviewe

How multinationals circumvent anti tax-avoidance regulations

The UK worldwide debt cap raised the tax bill for domestic multinational corporations, but not for foreign ones, writes Katarzyna A Bilick

Labor Market Consequences of Antitax Avoidance Policies

In this paper, I analyze the local labor market consequences of multinational firms reallocating employees across their affiliates in response to antitax avoidance policies. I leverage the introduction of a worldwide debt cap in 2010 in the United Kingdom as a quasi-natural experiment that limited one of the forms of profit shifting—debt shifting—for a group of multinational corporations (MNCs). Multinationals affected by the reform reallocated their employees from the United Kingdom to foreign locations. This affected London-based service sector firms the most. I show that this led to a reduction in the number of jobs available in regions exposed to the reform in the United Kingdom. In foreign countries, the initial reallocation of labor across firms resulted in a much larger expansion of the affected local labor markets. These results suggest that a reallocation of labor across firms generates asymmetries in how negative and positive firm-level shocks are amplified through regional markets

Comparing UK Tax Returns of Foreign Multinationals to Matched Domestic Firms

In this paper, I use confidential UK corporate tax returns data to explore whether there are systematic differences in the amount of taxable profits that multinational and domestic companies report. I find that the ratio of taxable profits to total assets reported by foreign multinational subsidiaries is one-half that of comparable domestic standalones. The majority of the difference is attributable to the fact that a higher proportion of foreign multinational subsidiaries report zero taxable profits. I document how the estimated difference is related to profit shifting and show that using accounting data leads to much smaller estimates of the difference

Profit Shifting and Corruption

This paper introduces heterogeneous profit shifting costs induced by corrupt tax officials to the analysis of profit shifting of multinationals. Using a theoretically derived corruption weighted tax differential, we show that corruption increases profit shifting of European firms. We use our estimates to calculate the implied tax revenue elasticities for European countries and find that countries with otherwise similar tax rates face lower tax revenue elasticities when they are more corrupt. This means that corruption negatively affects the revenue gains that countries could have from increasing their tax rates

Organizational capacity and profit shifting

This paper analyses the effect of a firm's organizational capacity on the reported profitability of multinational enterprises (MNEs). Better organizational practices improve productivity and the potential taxable profits of firms. However, higher adoption of these practices may also enable more efficient allocation of profits across tax jurisdictions, lowering actual taxable profits. We present new evidence that MNE subsidiaries with better such practices, when located in high-tax countries, report significantly lower profits and have a higher incidence of bunching around zero returns on assets. We show these results are driven by patterns consistent with profit-shifting behavior. Further, using an event study design, we find that firms with better practices are more responsive to corporate tax rate changes. Our results suggest organizational capacity, especially monitoring-related practices, enables firms to engage in shifting profits away from their high-tax subsidiaries

G20 Corporate tax ranking 2011

This report assesses the current competitiveness of the UK corporate tax system relative to other G20 countries. We measure competitiveness using two widely employed indicators: the effective average tax rate (EATR) and the effective marginal tax rate (EMTR). Theory and empirical evidence indicate that the EATR is relevant for the location of discrete investment projects, while the EMTR is relevant for the level of investment, given its location. Both the EATR and the EMTR depend on the statutory tax rate and the definition of the tax base; the EMTR depends more heavily on the tax base

Long-Term Orientation and Tax Avoidance Regulations

In this paper, we explore the relationship between the culture of the country where a multinational corporation (MNC) is headquartered and the MNC\u27s stock market reaction to tax avoidance regulations. Specifically, we examine the different responses of MNCs following the implementation of the 2010 UK reform that restricted profit shifting for a specific group of firms. We find that, in countries with short-term-oriented cultures, MNCs affected by this reform experienced positive stock market responses relative to their unaffected counterparts. This is not found in long-term-oriented cultures. This difference in response can partly be explained by the differing perceptions of the role tax havens play in tax minimization practices between more long-term-oriented cultures and those oriented towards the short term. We provide evidence that investors from more future-oriented cultures may recognize the short-lived effectiveness of a regulation ex ante, and thus price the quasi-exogenous market shock differently than their more short-term-oriented counterparts

Tax policy, investment and profit shifting

Many multinational firms (MNEs) pay low or no corporation tax in high-tax countries because they shift taxable income to tax havens. We incorporate nonconvex costs of profit shifting and unobserved heterogeneity in profit-shifting ability in the MNEs’ value maximization problem to study responses of firms to tax policies. We estimate our model using UK corporate tax returns data and quantify: (i) the elasticities of tax base and capital stock with respect to tax rates, (ii) the fixed and variable components of profit-shifting costs for different firm types, and (iii) the government’s trade-off between raising tax revenue by reducing profit shifting and attracting investment. Accounting for extensive margin profit-reporting decisions, we reconcile most of the discrepancies between previous micro- and macro-level estimates of tax base elasticities. We test the predictions of the model using a quasi-natural experiment that restricted profit-shifting by Italian MNEs that operated in the UK and evaluate two types of tax policies that can be analyzed using our approach

Debt Reallocation in Multinational Firms: Evidence from the UK Worldwide Debt cap

How do multinational firms respond to reforms that limit interest deductibility? In this paper, we analyze debt reallocation of multinationals after the implementation of a worldwide debt cap in the UK in 2010. We find that multinationals affected by the cap significantly reduced the tested debt ratio, suggesting the cap is effective. Affected multinationals increased debt holdings and the fraction of subsidiaries in non-UK subsidiaries facing a high corporate tax rate, while shrank operations in low tax countries. Although the cap allowed the UK tax authority to collect more tax revenue from affected multinationals, it did not change their worldwide effective tax rate. There is also evidence that the debt cap induced non-UK headquartered multinationals to shrink their operation in the UK. Our findings provide causal evidence for tax-motivated debt reallocation within multinationals, and shed light on how multinationals can circumvent regulations via adjusting their debt policies and organizational structures