Controlled Foreign Corporations, 1980

trolled Foreign Corporations passed the half trillion dollar mark, reaching $S08 billion [1]. From these investments in foreign sub-sidiary corporations, $699 billion of business receipts and $47.6 billion of pre-tax earnings and profits were generated. Taxes paid to foreign countries by these foreign subsidiaries totaled $16.4 billion. Nearly 4S percent ($13.6 billion) of the $31.2 billion of after-tax earnings and profits were paid to stockholders as dividends. U.S. corporations, as majority stockholders, received most ($10.7 billion) of these dividend payments. The relatively few domestic corporations (4,799) controlling these foreign subsidiaries tended to be large companies. Although repre-senting less than two-tenths of me percent of all domestic corporations, they accounted for 45 percent of the total assets, 43 percent of the business receipts, and S8 percent of the net income of all the 2.7 million domestic corporations, as shown in Figure A. EVOLUTION OF CONTROLLED FOREIGN CORPORATIONS After World War II, corporations were encour-aged to invest overseas for both economic and political reasons. The Marshall Plan, for instance, was a program which extended economic aid to European countries (and increased exports by U.S. companies) in order to accelerate their economic recovery. Additionally, as a means of developing their economies, Western European nations and developing countries lured foreign investments through various kinds of commercial and industrial concessions. Most of the U.S. products exported and most foreign investments came from large American corporations. The selling of products overseas was frequently a prelude to foreign investment. Once the foreign market was explored and penetrated via exports the next step was to set up a branch or a sub-sidiary. The former required establishing a place of business in a foreign country while the latter required establishing legal residence through incorporation in the country