What question did this study set out to answer?

This paper explores how U.S. firms' investment decisions are influenced by tax practices and net rates of return.

June 15, 2026

Taxation and the Location of U.S. Investments Abroad.

PHPhilip J. HarmelinkUniversity of New Orleans

Key Points

This paper explores how U.S. firms' investment decisions are influenced by tax practices and net rates of return.
Theoretical examination of tax practices affecting international investments.
Analysis of actual data to evaluate the theoretical frameworks.
Comparison of investment responses to net rates of return and specified tax rates.
U.S. firms generally respond to net rates of return.
The study finds that properly specified tax rates significantly influence investment decisions.

Abstract

Abstract The article presents information on the working paper, Taxation and the Location of U.S. Investments Abroad, by David G. Hartman and Daniel J. Frisch. This paper discusses in theory the tax practices which U.S. firms consider when making international investment decisions. Actual data are presented and analyzed to test the theoretical considerations. The authors draw the conclusion that U.S. firms respond in general to net rates of return and in particular to properly specified tax rates.

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