Assignment:
In 1987, U.S.-controlled companies earned an average 2.09% return on assets, nearly four times their foreigncontrolled counterparts. A number of American politicians have used these figures to argue that there is widespread tax cheating by foreign-owned multinationals.
a. What are some economically plausible reasons (other than tax evasion) that would explain the low rates of return earned by foreign-owned companies in the United States? Consider the consequences of the debt- financed U.S.-investment binge that foreign companies went on during the 1980s and the dramatic depreciation of the U.S. dollar beginning in 1985.
b. What are some of the mechanisms that foreign-owned companies can use to reduce their tax burden in the United States?
c. The corporate tax rate in Japan is 60%, whereas it is 35% in the United States. Are these figures consistent with the argument that big Japanese companies are overcharging their U.S. subsidiaries in order to avoid taxes? Explain.
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.