The Effects of U.S. Tax Policy on the Income Repatriation Patterns of U.S. Multinational Corporations

U.S. corporations owe taxes to the U.S. Treasury on income earned both inside and outside American borders. This paper examines the incentives created by the U.S. tax system for the legal avoidance of taxes on foreign source income. Using data from 1986 corporate tax returns, we investigate the extent to which U.S. corporations structure and coordinate remittances of income from their foreign subsidiaries to reduce their U.S. and foreign tax liabilities. In contrast to previous work in this area, our estimates of the tax consequences of income remittances from foreign subsidiaries to parent corporations explicitly take into account the ability to use foreign tax credits generated from one source of foreign income to offset the U.S. tax liability generated by other sources of foreign income, withholding tax rates on income remittances, variations in source country corporate income tax systems, and dynamic aspects of the U.S. tax system. Our findings indicate that U.S. multinationals are able to take advantage of the U.S. tax system to avoid paying much U.S. tax on their foreign source income.

Do Repatriation Taxes Matter? Evidence from the Tax Returns of U.S. Multinationals

An open question in the literature on the taxation of multinational corporations is whether repatriation taxes influence whether the profits of foreign subsidiaries are repatriated or reinvested abroad. Theoretical models suggest that dividend remittances should not be influenced by repatriation taxes. The results of recent empirical work indicate that dividend remittances are sensitive to repatriation taxes. This paper investigates whether the empirical evidence can be reconciled with the theoretical results by recognizing that repatriation taxes on dividends may vary over time and provide firms with an incentive to time repatriations so that they occur in years when repatriation tax rates are relatively low. We use information about cross-country differences in tax rates to separately estimate the influence of permanent tax changes, as would occur due to changes in statutory tax rates, and transitory tax changes on dividend repatriations. Our data contains U.S. tax return information for a large sample of U.S. corporations and their foreign subsidiaries. We find that the permanent tax price effect is significantly different from the transitory price effect and is not significantly different from zero, while the transitory tax price effect is negative and significant. This suggests that repatriation taxes do affect dividend repatriation behavior but only to the extent that they vary over time. Previous empirical work has apparently measured the effect of timing behavior.

Immunohistochemical estimation of cell cycle phase in laryngeal neoplasia

We previously developed an immunohistochemical method for estimating cell cycle state and phase in tissue samples, including biopsies that are too small for flow cytometry. We have used our technique to examine whether primary abnormalities of the cell cycle exist in laryngeal neoplasia. Antibodies against the markers of cell cycle entry, minichromosome maintenance protein-2 (Mcm-2) and Ki67, and putative markers of cell cycle phase, cyclin D1 (G1-phase), cyclin A (S-phase), cyclin B1 (G2-phase) and phosphohistone H3 (Mitosis) were applied to paraffin-embedded sections of normal larynx (n=8), laryngeal dysplasia (n=10) and laryngeal squamous cell carcinoma (n=10). Cells expressing each marker were determined as a percentage of total cells, termed the labelling index (LI), and as a percentage of Mcm-2-positive cells, termed the labelling fraction (LF). The frequency of coexpression of each putative phase marker was investigated by confocal microscopy. There was a correlation between Mcm-2 and Ki67 LIs (ρ=0.93) but Mcm-2 LIs were consistently higher. All cells expressing a phase marker coexpressed Mcm-2, whereas Ki67 was not expressed in a proportion of these cells. The putative phase markers showed little coexpression. Labelling index values increased on progression from normal larynx through laryngeal dysplasia to squamous cell carcinoma for Mcm-2 (P=0.001), Ki67 (P=0.0002), cyclin D1 (P=0.015), cyclin A (P=0.0001) and cyclin B1 (P=0.0004). There was no evidence of an increase in the LF for any phase marker. Immunohistochemistry can be used to estimate cell cycle state and phase in laryngeal biopsies. Our data argues against primary cell cycle phase abnormalities in laryngeal neoplasia

Has U.S. Investment Abroad Become More Sensitive to Tax Rates?

We use data from the U.S. Treasury corporate tax files for 1984 and 1992 to address two related questions concerning the investment decisions of U.S. multinational corporations. First, how sensitive are investment location decisions to tax rate differences across countries? And second, have investment location choices become more sensitive to differences in host country tax rates? We regress a measure of the real capital held in the manufacturing affiliates of U.S. manufacturing firms in each of the 58 countries in our sample on tax rate variables and measures of non-tax characteristics of countries. The availability of two years of data allows us to control for unmeasured country fixed effects. We find large estimated tax elasticities for investment abroad. Our basic estimates yield an elasticity of real capital to after-tax rates of return of close to three in 1992 and about 1.5 in 1984; both the elasticities and the difference between them are significant at standard levels. The increase of more than one in the estimated elasticities from 1984 to 1992 suggests that the allocation of real capital abroad may have become more sensitive to differences in host country taxes in recent years. These results are consistent with increasing mobility of capital and globalization of production

Has U.S. Investment Abroad Become More Sensitive to Tax Rates?

We use data from the U.S. Treasury corporate tax files for 1984 and 1992 to address two related questions concerning the investment decisions of U.S. multinational corporations. First, how sensitive are investment location decisions to tax rate differences across countries? And second, have investment location choices become more sensitive to differences in host country tax rates? We regress a measure of the real capital held in the manufacturing affiliates of U.S. manufacturing firms in each of the 58 countries in our sample on tax rate variables and measures of non-tax characteristics of countries. The availability of two years of data allows us to control for unmeasured country fixed effects. We find large estimated tax elasticities for investment abroad. Our basic estimates yield an elasticity of real capital to after-tax rates of return of close to three in 1992 and about 1.5 in 1984; both the elasticities and the difference between them are significant at standard levels. The increase of more than one in the estimated elasticities from 1984 to 1992 suggests that the allocation of real capital abroad may have become more sensitive to differences in host country taxes in recent years. These results are consistent with increasing mobility of capital and globalization of production.foreign direct investment; international taxation; multinationals;

An entirely specific type I A-kinase anchoring protein that can sequester two molecules of protein kinase A at mitochondria

A-kinase anchoring proteins (AKAPs) tether the cAMP-dependent protein kinase (PKA) to intracellular sites where they preferentially phosphorylate target substrates. Most AKAPs exhibit nanomolar affinity for the regulatory (RII) subunit of the type II PKA holoenzyme, whereas dual-specificity anchoring proteins also bind the type I (RI) regulatory subunit of PKA with 10–100-fold lower affinity. A range of cellular, biochemical, biophysical, and genetic approaches comprehensively establish that sphingosine kinase interacting protein (SKIP) is a truly type I-specific AKAP. Mapping studies located anchoring sites between residues 925–949 and 1,140–1,175 of SKIP that bind RI with dissociation constants of 73 and 774 nM, respectively. Molecular modeling and site-directed mutagenesis approaches identify Phe 929 and Tyr 1,151 as RI-selective binding determinants in each anchoring site. SKIP complexes exist in different states of RI-occupancy as single-molecule pull-down photobleaching experiments show that 41 ± 10% of SKIP sequesters two YFP-RI dimers, whereas 59 ± 10% of the anchoring protein binds a single YFP-RI dimer. Imaging, proteomic analysis, and subcellular fractionation experiments reveal that SKIP is enriched at the inner mitochondrial membrane where it associates with a prominent PKA substrate, the coiled-coil helix protein ChChd3