Multinational companies are affected by tax reforms both at home and abroad. We study the effect of foreign corporate tax reforms on domestic employment and wages. To do this, we link the universe of Norwegian firm-level foreign direct investment (FDI) data with the universe of Norwegian individual tax returns. Exploiting the staggered implementation of tax reforms in foreign countries which affect the subsidiaries of Norwegian firms, we find that domestically-owned Norwegian firms see domestic salaries increase by 2.4% following foreign tax cuts. We conclude that if all foreign profits are repatriated, approximately 18% of the foreign tax burden is borne by workers.
Contact person: David Heller
Subscription to the invitation mailing list and more information on the seminar page.