All else constant, the multinational corporation has a tax incentive to shift ______ toward low-tax jurisdictions and shift ______ toward high-tax jurisdictions.
A) expenses; expenses
B) expenses; revenues
C) revenues; expenses
D) revenues; revenues
E) None of the above

Question

Quizplus · Accepted Answer

Shifting revenues toward high-tax jurisdictions will result in a higher tax liability, while shifting expenses toward low-tax jurisdictions will result in a lower tax liability. Therefore, choice C is the best answer as it captures the opposite movements that would be incentivized by tax considerations.

All Else Constant, the Multinational Corporation Has a Tax Incentive