Friday, January 2, 2009
John R. Graham (Duke University, Fuqua School of Business), Michelle Hanlon (University of Michigan, Ross School of Business) & Terry J. Shevlin (University of Washington, Foster School of Business) have posted Barriers to Mobility: The Lockout Effect of U.S. Taxation of Worldwide Corporate Profits on SSRN. Here is the abstract:
Using data from a survey of tax executives, we examine the corporate response to the one-time dividends received deduction in the American Jobs Creation Act of 2004 (AJCA). We describe the firms' reported sources and uses of the cash repatriated under the Act. In addition, we examine non-tax costs companies incurred rather than bringing the cash home prior to the AJCA. We also contribute to current policy debates by examining whether firms would repatriate reinvested earnings again if a similar Act were to occur in the future and the likelihood that firms assess on there being another such Act. Overall, the evidence is consistent with a substantial lockout effect resulting from the current U.S. tax policy of taxing the worldwide profits of U.S. multinationals.