Abstract
Most studies of taxation and foreign investment limit their investigation to the effects of tax changes on aggregate foreign investment flows. The reason is practical; little evidence is readily available that would allow researchers to consider the effects of taxes on individual firm investment decisions. However, it seems likely that this data limitation may in fact cause researchers to draw the wrong conclusions regarding the actual responsiveness of investment flows to tax differences. In part, there are reasons for firms to remain in a particular location once they have selected it once. This persistence of investment activity may cause most repeat investors to have little responsiveness to small tax differences, while newer investors will respond more vigorously.
I thank seminar participants at UC Davis Department of Economics, and the 53rd Congress of the IIPF for comments. Carissa Perez provided excellent research assistance. I thank the Institute of Governmental Affairs IGCC for research support. All remaining errors are my own.
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Swenson, D.L. (1998). Investment Distinctions: The Effect of Taxes on Foreign Direct Investment in the U.S.. In: Shibata, H., Ihori, T. (eds) The Welfare State, Public Investment, and Growth. Springer, Tokyo. https://doi.org/10.1007/978-4-431-67939-4_11
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DOI: https://doi.org/10.1007/978-4-431-67939-4_11
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