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Products, services, and tax-motivated income shifting

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https://ir.library.oregonstate.edu/concern/articles/j3860g73t

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  • To better understand how the rise of global service-based activities affects multijurisdictional tax avoidance, we examine variation in tax-motivated income shifting among product- and service-based firms. We find that service-based firms are more responsive to income-shifting incentives, on average, than product-based firms and that the observed responsiveness among service-based firms is increasing over time. We also find that income shifting for product- and service-based firms varies differentially with intangible intensity, human-capital characteristics, and tax-haven usage. These results inform current policy debates regarding the effectiveness of various measures aimed at combating base erosion and income shifting.
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  • 77
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  • 1
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  • We appreciate helpful comments from William Gentry (editor), Stacy Dickert-Conlin (editor), two anonymous referees, Zeyu Ou (discussant), Zhuoli Axelton, Jenna El-Khalili, Bradford Hepfer, Robert Hills, Justin Kim, Yijun Li, Michael Mayberry, Stefan Richter, Junwei Xia, and participants in the 2021 Florida Accounting Symposium. We also acknowledge and appreciate Katharine Drake, Nathan Goldman, and Francis Murphy for use of their foreign employment data, as described in Drake, Goldman, and Murphy (2022).
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  • 1944-7477

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