Does Acquisition by Non-U.S. Shareholders Cause U.S. Firms to Pay Less Tax?

The U.S. corporate tax revenue implications for foreign-domiciled firms acquiring U.S. companies is an important and longstanding tax policy issue. This study attempts to provide some empirical underpinning for this controversial debate. We compare actual corporate taxable income before and after th...

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Bibliographic Details
Published inThe Journal of the American Taxation Association Vol. 27; no. 1; pp. 25 - 38
Main Authors Blouin, Jennifer L., Collins, Julie H., Shackelford, Douglas A.
Format Journal Article
LanguageEnglish
Published Sarasota American Accounting Association 01.04.2005
Subjects
Acquisitions & mergers
Corporate taxes
Foreign investments in the US
Inventory
Regression analysis
Stockholders
Studies
Tax planning
Tax returns
Taxable income
Transfer pricing
Wholesalers
United States > US
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Summary:The U.S. corporate tax revenue implications for foreign-domiciled firms acquiring U.S. companies is an important and longstanding tax policy issue. This study attempts to provide some empirical underpinning for this controversial debate. We compare actual corporate taxable income before and after their 1996 acquisitions for 31 matched pairs of firms, half acquired by foreign-controlled companies and half acquired by American-controlled firms. Contrary to claims that foreign-controlled firms pay less tax, we find no evidence that taxable income declines more after a non-U.S. shareholder acquires a U.S.-domiciled firm than after a U.S. shareholder acquires a U.S.-domiciled firm.
ISSN:0198-9073
1558-8017
DOI:10.2308/jata.2005.27.1.25