Exploring the role Delaware plays as a domestic tax haven


Journal Article

We examine whether Delaware is a domestic tax haven. We find that taxes play an economically important role in determining whether U.S. firms locate subsidiaries in Delaware and that a Delaware-based state tax avoidance strategy lowers state effective tax rates by between 0.7 and 1.1 percentage points, on average. The tax savings represent a 15-24% decrease in the state income tax burden and translate to an increase in net income of 1.04-1.47%. However, we find that the tax benefits of Delaware tax strategies are diminishing over time in response to initiatives by state governments to limit multistate tax avoidance. © 2013 Elsevier B.V.

Full Text

Duke Authors

Cited Authors

  • Dyreng, SD; Lindsey, BP; Thornock, JR

Published Date

  • June 1, 2013

Published In

Volume / Issue

  • 108 / 3

Start / End Page

  • 751 - 772

International Standard Serial Number (ISSN)

  • 0304-405X

Digital Object Identifier (DOI)

  • 10.1016/j.jfineco.2013.01.004

Citation Source

  • Scopus