Based on the research of Texas McCombs Accounting Professor Lillian Mills: Despite popular belief, all U.S. firms haven’t been sending most of their earnings abroad to dodge taxes, finds a study using IRS data.
In recent years, one of the major exports of U.S. businesses has been cash. Several reports, such as one by Bloomberg News, have tallied more than $2 trillion of earnings stashed in foreign subsidiaries in countries with lower corporate tax rates.
So it might come as a surprise that over a decade, American businesses brought more money into the country than they shipped out. That’s one conclusion from new research by Lillian Mills, accounting professor at Texas McCombs, and two recent McCombs doctoral accounting graduates, Lisa De Simone and Bridget Stomberg.
Analyzing corporate returns filed with the Internal Revenue Service, the researchers found that U.S. multinationals imported $1 trillion from offshore affiliates, while they exported $830 million. Close to two-thirds of all returns showed more money coming in than going out.
Those businesses tended to be older and larger ones, which built U.S. factories and headquarters decades ago.
Read the full article in Big Ideas: Research and insights from Texas McCombs here.
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