Title: Economic effects of regional tax havens
Description: "How does the opportunity to use tax havens influence economic activity in nearby non-haven countries? Analysis of affiliate-level data indicates that American multinational firms use tax haven affiliates to reallocate taxable income away from high-tax jurisdictions and to defer home country taxes on foreign income.  Ownership of tax haven affiliates is associated with reduced tax payments by nearby non-haven affiliates, the size of the effect being equivalent to a 20.8 percent tax rate reduction.  The evidence also indicates that use of tax havens indirectly stimulates the growth of operations in non-haven countries in the same region.  A one percent greater likelihood of establishing a tax haven affiliate is associated with 0.5 to 0.7 percent greater sales and investment growth by non-haven affiliates, implying a complementary relationship between haven and non-haven activity.  The ability to avoid taxes by using tax haven affiliates therefore appears to facilitate economic activity in non-haven countries within regions"--National Bureau of Economic Research web site.
Subjects: Tax havens, Taxation