But the clearest distortion is not size, but location. For multinational corporations based in the United States, taxes create an incentive to expand overseas operations by opening foreign subsidiaries, expanding foreign operations and acquiring foreign companies. Unlike a pure tax shelter, which generates paper losses to avoid taxes, the effects of tax expatriations are real. Taxes distort the organization of corporate activities and shift operations outside our borders.
via How Tax Laws Distort the Pfizer Deal – NYTimes.com – NYTimes.com.
