Foreign Tax Credit Limitations and Preferred Stock Issuances
发现1986年《税收改革法案》中更严格的利息分配规则和外国税收抵免限制，促使美国跨国公司增加使用优先股作为融资工具。
This paper documents a consequence of a subset of tax law changes enacted in the Tax Reform Act of 1986 applicable to U.S. multinational corporations. Specifically, we provide evidence that the more stringent interest allocation rules and foreign tax credit limitations enacted in the 1986 Act resulted in the increased use of preferred stock as a financing instrument for U.S. multinationals. By decreasing the tax-favored status of debt for multinationals, Congress provided incentives for issuances of an alternative financing instrument, preferred stock. The cost of capital for multinational firms is a function of their total tax burden consisting of both domestic and foreign taxes. The United States taxes the worldwide income of U.S.-based multinational corporations. In addition, U.S. multinationals pay taxes in foreign jurisdictions based on the tax rules of the foreign governments. The U.S. mitigates, but does not eliminate, multiple taxation of foreign income