An Analysis of the Relative U . S . Tax Burden of U . S . Corporations Having Substantial Foreign Ownership

9 National Tax Journal Vol. LIII, No. 1 Abstract We compare the tax-paying behavior of U.S. firms substantially influenced by foreign-domiciled firms with other U.S. firms. Because public information is lacking on U.S. firms whollyowned by foreign investors, we concentrate on publicly held firms with “significant,” but not 100 percent, foreign ownership. Public financial statements are analyzed rather than Internal Revenue Service data. We find firms with significant foreign ownership pay less tax than other U.S. firms, but find no support for the hypothesis that the reduced tax burden is attributable to income manipulation. Our evidence suggests that foreign investors select U.S. targets that are (or become) less profitable than their industry counterparts.