Which of the following is not an observed response of Multinational Enterprises (MNEs) to higher corporation tax in one country
A) Lowering wages in that location
B) Internal restructuring to shift profits to lower tax locations
C) Altering investment plans so as to expand into new, lower tax, locations
D) Altering investment plans so as to scale back in the higher tax location
E) Altering investment plans so as to expand in existing plants that are in a lower tax location

Question

Quizplus · Accepted Answer

Lowering wages in response to higher corporation tax is not a common observed response of MNEs. The other options, such as internal restructuring and altering investment plans to shift profits to lower tax locations or expand into new, lower tax locations are commonly observed responses to higher corporation tax.

Which of the Following Is Not an Observed Response of Multinational