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The foreign share of the worldwide income of U.S. multinational corporations (MNCs) has risen sharply in recent years. Data from a panel of 754 large MNCs indicate that the MNforeign income share increased by 14 percentage points from 1996 to 2004. The differential between a company's U.S. and foreign effective tax rates exerts a significant effect on the share of its income abroad, largely through changes in foreign and domestic profit margins rather than a shift in sales. U.S.-foreign tax differentials are estimated to have raised the foreign share of MNC worldwide income by about 12 percentage points by 2004. Lower foreign effective tax rates had no significant effect on a company s domestic sales or on the growth of its worldwide pre-tax profits. Lower taxes on foreign income do not seem to promote \"competitiveness. \"

We evaluate proposals for U.S. international tax reform including dividend exemption, full current inclusion, dividend exemption with an effective tax rate test and active business exception, dividend exemption with a per-country or overall minimum tax, and repeal of check-the-box. As alternatives to active business tests, we consider minimum taxes that allow expensing for real investment abroad. We evaluate reforms along many dimensions including the lockout effect, income shifting, the choice of location, and complexity. We find a per-country minimum tax with expensing has many advantages with respect to these margins. The simpler overall minimum tax is a serious alternative.

Economists have long sought to predict how macroeconomic shocks will affect individual welfare. Macroeconomic data and forecasts are easily available when crises strike. But policy action requires not only understanding the magnitude of a macro shock, but also identifying which households or individuals are being hurt by (or benefit from) the crisis. Moreover, in many cases, impacts on the ground might be already occurring as macro developments become known, while micro level evidence is still unavailable because of paucity of data. Because of these reasons, a comprehensive real-time understanding of how the aggregate changes will translate to impacts at the micro level remains elusive. This problem is particularly acute when dealing with developing countries where household data is sporadic or out of date. This volume outlines a more comprehensive approach to the problem, showcasing a micro simulation model, developed in response to demand from World Bank staff working in countries and country governments in the wake of the global financial crisis of 2008-09. During the growing catastrophe in a few industrialized countries, there was rising concern about how the crisis would affect the developing world and how to respond to it through public policies. World Bank staff s was scrambling to help countries design such policies; this in turn required information on which groups of the population, sectors and regions the crisis would likely affect and to what extent. The volume is organized as follows. Chapter 1 summarizes the methodology underlying the micro simulation model to predict distributional impacts of the crisis, along with several case studies that highlight how the model can be used in different country contexts. Chapters 2 to 4 are written by experts external to the Bank, two of whom participated as discussants at a workshop on the micro simulation work organized in May, 2010 at the World Bank headquarters. Chapter 2 comments on the broader implications and shortcomings of applying the technique described in Chapter 1 and the ability or willingness of governments to respond adequately to its results. Chapter 3 draws parallels between the United States and developing countries to discuss the lessons that can be learned for mitigating the impacts of future crises. Chapter 4 discusses how the micro simulation approach can be sharpened to make it a better tool for distributional analysis moving forward.

This article analyzes the effects of income taxation on the international migration and earnings of top earners using a Danish preferential foreigner tax scheme and population-wide Danish administrative data. This scheme, introduced in 1991, allows new immigrants with high earnings to be taxed at a preferential flat rate for a duration of three years. We obtain two main results. First, the scheme has doubled the number of highly paid foreigners in Denmark relative to slightly less paid—and therefore ineligible—foreigners. This translates into a very large elasticity of migration with respect to 1 minus the average tax rate on foreigners, between 1.5 and 2. Second, we find compelling evidence of a negative effect of the scheme-induced reduction in the average tax rate on pretax earnings of foreign migrants at the individual level. This finding can be rationalized by a matching frictions model with wage bargaining where there is a gap between pay and marginal productivity.

This paper investigates the determinants of corporate expatriations. American corporations that seek to avoid U.S. taxes on their foreign incomes can do so by becoming foreign corporations, typically by \"inverting\" the corporate structure, so that the foreign subsidiary becomes the parent company and the U.S. parent company becomes a subsidiary. Three types of evidence are considered in order to understand this rapidly growing practice. First, an analysis of the market reaction to Stanley Works' expatriation decision implies that market participants expect its foreign inversion to be accompanied by a reduction in tax liabilities on U.S. source income, since savings associated with the taxation of foreign income alone cannot account for the changed valuations. Second, statistical evidence indicates that large firms, those with extensive foreign assets, and those with considerable debt are the most likely to expatriate—suggesting that U.S. taxation of foreign income, including the interest expense allocation rules, significantly affect inversions. Third, share prices rise by an average of 1.7 percent in response to expatriation announcements. Ten percent higher leverage ratios are associated with 0.7 percent greater market reactions to expatriations, reflecting the benefit of avoiding the U.S. rules concerning interest expense allocation. Shares of inverting companies typically stand at only 88 percent of their average values of the previous year, and every ten percent of prior share price appreciation is associated with 1.1 percent greater market reaction to an inversion announcement. Taken together, these patterns suggest that managers maximize shareholder wealth rather than share prices, avoiding expatriations unless future tax savings—including reduced costs of repatriation taxes and expense allocation, and the benefits of enhanced worldwide tax planning opportunities—more than compensate for current capital gains tax liabilities.

Are agroforestry systems still realistic methods to balance forestation and livelihood for small-scale farmers? To answer this question, the author continuously monitored a 48-year agroforestry management system from the perspective of land management history and tree growth. The study plot is located in Tenggarong district, East Kalimantan Province, Borneo, Indonesia. The site covers a total area of 2 ha and has been managed by a farmer since 1974. Chronological data on the cultivated crops and tree growth were collected through direct observations and mensuration by local university researchers. As of 2022, an Agathis forest with a standing stock volume of 632.4 m3 had been created by agroforestry practices. On the other hand, the average income he generated was US$ 1231/year from 1974 to 2016. The gross cash income of the farmer was below or at the same level as the provincial minimum wage for 23 years or 48% of the entire management period. The results of the current study showed that the main income source changed over the years. This change was influenced by many factors, such as family member life stage, social demand supported by the increasing population, Agathis tree growth and farmer age. In response to change, the farmer planted many kinds of crops and selected the most profitable commodity in each period. Due to this trial-and-selection approach, his income source was diversified and generated a stable cash income not only throughout the year, but also throughout the 48 years management period. The results of the current case study showed that the agroforestry system is a realistic method for forestation and long-term management for small-scale farmer. On the other hand, it is not the optimal method if the purpose is to maximize cash income.

This study examines the endogenous relation between corporate social responsibility (CSR) and tax avoidance by focusing on a common strategy of corporate tax avoidance, i.e., establishing entities in offshore tax havens. Using hand-collected data on a sample of U.S. firms, we find that firms' CSR ratings increase substantially in the two years after they first open tax haven affiliates. We provide evidence by using the controlled foreign corporations (CFC) look-through rule enacted by Congress in 2006 that facilitates offshore profit shifting. We find that firms that are affected by the CFC legislation increase their CSR practices in response. Overall, our results are consistent with the risk management theory, which argues that firms hedge against the potential negative consequences of aggressive tax avoidance practices through an increase in positive CSR activities.

The rapid advancement of digital communication and information technologies has significantly influenced rural household income and income inequality. Based on a sample of 2216 farmers from the China Family Panel Studies (CFPS), this analysis combines Ordinary Least Squares (OLS) regression with Conditional Mixed Process (CMP) estimation to account for endogeneity, evaluating how internet adoption affects both income diversification and inequality patterns among Chinese farmers. The findings reveal three key insights: First, internet use significantly increases farmers’ household income while reducing overall income inequality. Second, the positive impact of internet use on total income is primarily driven by increases in wage and operating income, while the reduction in income inequality is associated with a more equitable distribution of these income sources. Third, human capital plays a moderating role, with high-human-capital farmers benefiting more from internet use in terms of income growth and inequality reduction. Based on these findings, this study suggests that policymakers should promote internet adoption to enhance farmers’ incomes and address income inequality, while paying attention to the varying effects across different human capital groups. These insights provide valuable policy implications for achieving common prosperity in developing countries and regions.

Income distribution is found to be highly skewed among farm households with a Gini coefficient of 0.48. Most of the marginal and small farm households are in lower-income strata. Higher participation in pluriactivity and the highest Gini coefficient within each farm size category for marginal (0.50) and small farm size category households (0.45) highlight the tug of war for survival. Regression analysis revealed that less-educated and resource-poor farmers engaged themselves more in non-agricultural and unorganised sources of income, i.e., wages and non-farm business. Source-wise decomposition revealed that livestock and casual wages decrease income inequality. Hence, small holder farmer-centric farming systems and crops, low interest rate loans for women engaged in livestock rearing, agro-processing units and skill development centres to increase the share of non-farm income in total income are the key policy interventions.

我國與其他國家締結之租稅協定，具有國內法效力，且屬於特別法性質，倘若租稅協定對於營業所得之來源地標準，有特別規定時，應優先適用之（所得稅法第124條）。關於營業所得之來源地標準，租稅協定範本僅規定在境內營業，至於境內營業之判斷標準，日本立法例以往採取「實質經濟活動地點」是否在國內作為判斷基準，包括應考量貨物所在地、締約地，以及重要締約過程地點等因素。美國立法例為統一簡便管理，使徵納雙方便於遵循，原則上採取「法律上所有權移轉地點」，作為判斷基準。德國及日本立法例，參照OECD租稅協定範本第7條規定：「無常設機構，則無課稅」之課稅法則，對於營業所得之境內來源所得判斷標準，原則上採取「常設機構」標準，以歸屬於境內常設機構之營業所得，才作為境內來源所得之課稅範圍。在跨越境內及境外之營業活動，取得之混合來源所得，應按照比例分配其境內外之來源所得。如果無法明確劃分生產與銷售之價值貢獻時，則導入推計課稅之法理。亦即依據納稅義務人提供之資料為基礎，按照獨立企業原則進行推計課稅。