TY  - JOUR
T1  - Income Shifting and U.S. International Trade in Goods Statistics
JF  - Journal of Accounting and Public Policy
Y1  - 2021
A1  - Deng,Junfang
A1  - Laux,Rick C
KW  - Accounting
AB  - Intrafirm trade represents greater than one-third of total U.S. international trade in goods. Since these are not arm’s-length transactions, trade policymakers have voiced concerns that income shifting may distort international trade in goods statistics through the manipulation of transfer prices. Using country-level data on intrafirm exports and imports, we estimate a path analysis that simultaneously tests how and to what extent tax-motivated transfer pricing and real investment decisions affect intrafirm trade in goods statistics. Contrary to speculation, we do not find an economically significant relation between transfer pricing and intrafirm trade in goods statistics. In contrast, we find that tax-motivated location decisions create a 21 (20) percent or $819.7 ($927.1) million difference in mean intrafirm exports (imports) between the U.S. and a low- and high-tax country. This study provides trade policymakers with relevant information about the extent to which real investment decisions and accounting manipulations affect intrafirm trade in goods statistics and contributes to the international trade and income shifting literatures.
VL  - 40
CP  - 5
U2  - a
U4  - 193433554944
ID  - 193433554944
ER  -