| The problem of focus for this study was the lack in understanding of whether the repatriation tax, the after-tax return on investment in the home country, the after-tax return on investment abroad, and the debt to assets ratio affect the percentage of earnings repatriated and the timing of repatriations. It was also not known if foreign multinational corporations and U.S. multinational corporations repatriate different amounts of their foreign earnings. In this post-ex-facto quantitative study, I analyzed repatriations of multinational corporations. Of important note, this study has proven the shifting of income overseas of U.S. multinational corporations does reduce tax revenue on the income shifted overseas because the mean tax rate on the earnings repatriated is less than the rate earned on U.S. source income, but the overall percentage of income repatriated is increased by this shifting of income overseas. Thus, shifting income overseas may increase the overall tax revenue. This study also provides evidence that the repatriation tax rate does not affect the repatriations of U.S. multinational corporations and changes in the tax rate would not increase repatriations, so the U.S. policy to tax worldwide income does not increase the amount of earnings permanently reinvested overseas as critics of the policy argue. Further research into repatriations should further analyze the differences between the differences in the effects the after-tax return on investment abroad and the debt to assets ratio have on the repatriations of U.S. multinational corporations and foreign multinational corporations. |
