The article explores how changing the way multijurisdictional companies are taxed can affect their behavior and government strategies. By comparing Separate Accounting and Formulary Apportionment, the study shows that under Separate Accounting, companies invest less in lower-tax areas and engage in tax competition. However, switching to Formulary Apportionment eliminates these tax-shifting opportunities, leading to different economic outcomes. Allowing firms to offset losses among affiliates can act as a tax-shifting and insurance mechanism.