5 Coming Home To America: Dividend Repatriations By

American corporations earn a large and growing volume of after-tax profits through their affiliated foreign companies. The foreign earnings of U.S. corporations are typically subject to taxation both by host foreign governments and by the U.S. government, an arrangement that dramatically complicates the companies ’ tax returns and the consequences of their international financial transactions. Under these circumstances, obvious questions arise about the extent to which the system of international taxation affects the behavior of multinational corporations. This paper analyzes the financial flows from foreign subsidiaries of American multinational corporations to their parent corporations in the United States. These flows represent one method by which foreign earn-ings of American companies are returned (“repatriated”) to American investors. Their size generally reflects the size of American investments overseas: in 1984, the last year for which data are available, the controlled foreign corporations of American multinationals earned after-foreign-ta