State and provincial corporate tax planning: income shifting and sales apportionment factor management

State and provincial corporate tax planning: income shifting and sales apportionment factor... We empirically document a strategy through which corporations avoid state income taxes. Examining aggregated American state and Canadian provincial data from 1983–1991, we find corporate income tax revenues are concave in corporate tax rates, consistent with firms shifting their tax bases to more favourably taxed jurisdictions. Additional tests exploit unique features of state formula apportionment systems and find manufacturing shipments from states that tax outside their borders (throwback states) are decreasing in corporate income tax rates on sales. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting and Economics Elsevier

State and provincial corporate tax planning: income shifting and sales apportionment factor management

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Publisher
Elsevier
Copyright
Copyright © 1998 Elsevier Science B.V.
ISSN
0165-4101
D.O.I.
10.1016/S0165-4101(98)00028-7
Publisher site
See Article on Publisher Site

Abstract

We empirically document a strategy through which corporations avoid state income taxes. Examining aggregated American state and Canadian provincial data from 1983–1991, we find corporate income tax revenues are concave in corporate tax rates, consistent with firms shifting their tax bases to more favourably taxed jurisdictions. Additional tests exploit unique features of state formula apportionment systems and find manufacturing shipments from states that tax outside their borders (throwback states) are decreasing in corporate income tax rates on sales.

Journal

Journal of Accounting and EconomicsElsevier

Published: Jun 30, 1998

References

  • Taxation, regulation, and the organizational structure of property-casualty insurers
    Petroni, K; Shackelford, D

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