(w/ D. Dharmapala) National Tax Journal, 63 (December 2010), 723-740.
Many features of U.S. tax policy towards multinational firms — including the governing principle of capital export neutrality, the byzantine system of expense allocation, and anti inversion legislation — reflect the intuition that building “strong fences” around the United States advances American interests. This paper examines the interaction of a strong fences policy with the increasingly important global markets for corporate residence, corporate control and corporate equities. These markets provide opportunities for entrepreneurs, managers, and investors to circumvent a strong fences policy. The paper provides simple descriptive evidence of the growing importance of these markets and considers the implications for U.S. tax policy.