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Market-Based Solutions to Vital Economic Issues

international tax

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Join the Urban-Brookings Tax Policy Center and the University of North Carolina Tax Center for a live webinar featuring accounting, law, and economics experts as they discuss the effects of the Biden Administration on corporate tax proposals.

In partnership with the AICPA, the UNC Tax Center's expert panel will share highlights from the Senate Finance Committee expected whitepaper on proposed US tax legislation, details from the expected Treasury Green Book on Biden administration revenue proposals, as well as updates and discussion of the latest academic research on income shifting and global tax policy.

We undertake the first empirical analysis of profit shifting by U.S. firms during foreign tax holidays.

Jun 10, 2020

Tax Income Shifting

There is growing evidence that many multinational corporations are lowering their tax obligations by engaging in income shifting—moving income from high-tax countries to low-tax countries or tax havens, and shifting deductions from low-tax countries to high-tax countries. By at least one estimate, the result is loss of nearly $100 to $240 billion annually in global tax revenues. In this Kenan Insight, we explore the extent of the problem and what might be done to address it.

We quantify the net effect of recent U.S. tax reform on the tax rates of public U.S. corporations and find they decreased by 7.5 to 11.4 percentage points on average following tax reform. Further, we separately examine the effect of tax reform on purely domestic firms and multinational firms because some key provisions only affect multinational firms.

Following 2 decades of discussion, the border adjustment tax (BAT) briefly emerged as part of proposed US corporate tax reform in early 2017. While heavily debated, little empirical evidence exists regarding the BAT. We take advantage of the period during which the BAT was under strong consideration to examine its effects on shareholder value.

We undertake the first large-sample analysis of foreign tax holiday participation by U.S. firms.

We investigate the consequences of public disclosure of information from company income tax returns filed in Australia. Supporters of more disclosure argue that increased transparency will improve tax compliance, while opponents argue that it will divulge sensitive information that is, in many cases, misunderstood.

Although subsidiary disclosures in firms’ filings with the Securities and Exchanges Commission (SEC; Exhibit 21) represent the most granular required public disclosure of a firm's geographic footprint, little is understood about the quality of the disclosure, and anecdotal evidence suggests firms may not fully comply with the disclosure requirements. We use data provided by multinational firms to the Internal Revenue Service regarding their foreign subsidiary locations to explore the accuracy of public subsidiary disclosures on Exhibit 21 of Form 10‐K per SEC rules.

Aug 11, 2017

2017 UNC Tax Symposium

This April, the UNC Tax Center once again welcomed guests from across the country and around the world to Chapel Hill for our 20th Annual UNC Tax Symposium. The event was a great success, with participants ranging from academic researchers in accounting, finance, law and economics to policymakers and practitioners with an interest in evidence-based tax research.

We investigate whether firms in close customer–supplier relationships are better able to identify and implement tax avoidance strategies via supply chains. Consistent with our prediction, we find that both principal customers and their dependent suppliers avoid more taxes than other firms. Further analysis suggests that principal customers and dependent suppliers likely engage in tax strategies involving shifting profits to tax haven subsidiaries.

We use a shock to the public scrutiny of firm subsidiary locations to investigate whether that scrutiny leads to changes in firms’ disclosure and corporate tax avoidance behavior. ActionAid International, a non-profit activist group, levied public pressure on noncompliant U.K. firms in the FTSE 100 to comply with a rule requiring U.K. firms to disclose the location of all of their subsidiaries.