Who benefits from commodity price shocks? This paper studies the geographic allocation of extractive MNEs profits generated by price shocks - usually called windfall profits. We combine new administrative data on the worldwide activity of MNEs with exhaustive oil, gas, and mining production data at the firm level. We show that extractive MNEs allocate a third of their profits in non-extractive countries, and that profitability and effective tax rates display a U-shaped relationship in this sector. We identify the allocation of windfall profits by leveraging differences in (i) the product specialization of extractive firms and (ii) commodity price changes, in a shift-share design. We provide evidence of overbooking of windfall profits in low-tax countries.  For a $1 increase in consolidated windfall profits, we observe a $0.2 increase in tax havens, $0.8 in extractive affiliates, and no increase in the rest of the group. We derive implications for government revenues using new stylized facts on effective tax rates in the extractive sector drawn from our data.

Using exhaustive microdata on the worldwide activity of multinational firms from Country-by-Country Reports linked to employer-employee data, we study how profit shifting affects workers' earnings. We estimate that large French multinationals shift 19% of their foreign profits annually to low-tax jurisdictions, resulting in €10.3 billion shifted out of France and €3.7 billion in lost tax revenues. Exploiting France's mandatory profit-sharing policy, which mechanically links subsidiary-level reported profits to workers' compensation, we show that profit shifting reduces annual employees' earnings by 2.6%. Low-income workers are disproportionately affected, the bottom 10% losing 3.2% of wages compared to 2.3% for top 10% earners. Changing the profit-sharing formula to account for global profitability, rather than subsidiary-level profitability, would increase wages by 4.1% for workers in profit-shifting subsidiaries.

Hotelling Meets Laffer - Behavioral Effects of Minerals Taxation

Taxation and Intellectual Property Payments,  with Laurie Ciaramella and Arthur Guillouzouic