Taxation and the Global Allocation of Intangibles

Abstract

We study how international tax systems shape the global allocation of intangible assets. Firm-level data show that cross-border patent ownership transfers respond strongly to tax differentials, especially within multinational firms, while arm’s-length transfers are more closely associated with intellectual property rights (IPR) protection. We develop a model in which patent owners choose whether to license, sell, or transfer patents to a foreign affiliate, linking tax rates, IPR protection and transfer-pricing wedges to patent location. Counterfactuals suggest that tax harmonization and stronger enforcement reduce profit shifting and expand the US royalty tax base, whereas a global minimum tax has limited effects.

Jesse LaBelle

Fourth-Year Economics PhD Candidate

Jesse LaBelle is a fourth-year PhD Candidate in the Northwestern University Economics Department.