Corporate tax payments under formulary apportionment: Evidence from the financial reports of 50 major U.S. multinational firms

Kimberly A. Clausing, Yaron Lahav

Research output: Contribution to journalArticlepeer-review

8 Scopus citations

Abstract

Under a formulary apportionment system of taxing multinational corporate income, U.S. tax liabilities would be based on the product of a multinational firm's worldwide income and the fraction of their real activities that occur in the United States - typically, an average of asset, payroll, and sales shares. This analysis utilizes financial reporting data for 50 large U.S. multinational firms to analyze how tax payments would change under a possible formulary system, updating Shackelford and Slemrod (1998). Our time period is 2005-2007 instead of 1989-1993. We find that tax payments under formulary apportionment would increase modestly overall but by a lower magnitude than found by Shackelford and Slemrod. Given the changes in the international tax environment since the earlier time period, this is a puzzling finding; we speculate regarding possible explanations.

Original languageEnglish
Pages (from-to)97-105
Number of pages9
JournalJournal of International Accounting, Auditing and Taxation
Volume20
Issue number2
DOIs
StatePublished - 29 Jun 2011

Keywords

  • Corporate Tax Revenues
  • Formulary Apportionment
  • International Taxation
  • Multinational Firm Taxation

ASJC Scopus subject areas

  • Accounting
  • Finance

Fingerprint

Dive into the research topics of 'Corporate tax payments under formulary apportionment: Evidence from the financial reports of 50 major U.S. multinational firms'. Together they form a unique fingerprint.

Cite this